What is the name of your state? RI
I am asking this because I am refinancing the 80% portion of my combo loan, taking an equity hit over the next few years in order to avoid an ARM fixed rate period ending in 3 years. I am taking a new 7 year ARM in it's place, makes the most sense for me (plan on moving in 5). I calculate that if I keep my payment where it was before the refi (overpaying on the refi), I will be able to recoup much of this lost equity over the next several years.
That being said, which loan should I overpay on?
Primary: 250K, brand new 7/1ARM at 5.375%
Secondary: 64K 30 year loan, 3 years in, at 7% (balloon at 15)
My instincts tell me that paying more on the smaller, higher interest rate loan would be better, unless there is something I am missing here?
I am asking this because I am refinancing the 80% portion of my combo loan, taking an equity hit over the next few years in order to avoid an ARM fixed rate period ending in 3 years. I am taking a new 7 year ARM in it's place, makes the most sense for me (plan on moving in 5). I calculate that if I keep my payment where it was before the refi (overpaying on the refi), I will be able to recoup much of this lost equity over the next several years.
That being said, which loan should I overpay on?
Primary: 250K, brand new 7/1ARM at 5.375%
Secondary: 64K 30 year loan, 3 years in, at 7% (balloon at 15)
My instincts tell me that paying more on the smaller, higher interest rate loan would be better, unless there is something I am missing here?