Which ARM would you pick?

[shanaling]

I currently have a 7/1 ARM at 3.5 % with remaining balance of $264k. I plan on staying in this home for another 5 to 7 years, but life is unpredictable.

I was given two options:

Bank number 1: 5/1 ARM 2.5% interest rate, $6750 in fees

Bank number 2: 5/1 ARM 2.75% interest rate, $3030 in fees

Which one would you pick and why?

Thanks!

[solon]

Are you looking for a basic break-even analysis? Bank 1 is going to cost you more in fees, but save on interest. How much interest would you save each month with Bank 1? How many months of that saving would it take to equal the extra fees?