Stick with Current Mortgage or Refi

[couronne]

I am new to Mr. Moneymustache and can tell I have a lot to learn! I purchased a condo in December 2014. My first instinct was to go with a fixed rate because interest rates are so low. The mortgage person I worked with said I could get any mortgage I want, but he felt I would be making a big mistake by not getting a 10/1 ARM. He convinced me to get the ARM and then pay the difference between the amount I would pay on the fixed rate and the arm to lower my principal much faster. (In 10 years, I will have paid 12K more than the fixed). He also mentioned that statistically most people don't stay in their homes more than 7 years, however, I am single and don't know what the future holds. The ARM is 3% and I am paying an extra $75-100/month on principal. In 10 years, I can afford the mortgage if it capped at 9%, but I would rather be putting the $300/month (worst case scenario) towards my retirement.  Since mortgage rates are at all time lows, would it be better to refinance now or take the risk and refinance before the end of the 10 years? Thanks in advance!

[Another Reader]

Mortgage rates have moved up.  You would be looking at close to 4 percent now for a 30 year fixed rate loan and closing costs out of pocket to refinance.  I would have gotten a fixed rate when you bought, but in your shoes I would not refinance now.  Instead, I would keep an eye on rates and take the money you are saving and invest it into your retirement accounts if you have not maxed them out.  Rates will likely go up in the not too distant future, but as your income increases, you can both pay down the principal and invest as you get closer to the end of the fixed term.  If they drop again to the point it makes sense to refinance, then do it.

[Bicycle_B]

I wouldn't refi unless your future becomes more definite. 

Your focus on making early mortgage payments works in your favor.  Remember, paying early involves no fees; refinancing does involve fees.

Maybe you'll sell the house and be glad you didn't waste money on the refi costs.  The extra principal would go straight into your pocket.  Or your income may rise, your improving Mustache skills will cut your costs, and you will pay the whole mortgage off.  As long as you're saving money instead of spending it (even spending money on refi), you will have options.  A light ship floats best.  Good luck in any case!