Mortgage rates back to all time lows, ARM, refinancing

[Hersh M.]

So looks like with bond yields making all time lows, mortgage rates also continue to decline to record lows or very close to those levels. Not sure if its a good sign or bad. 

But my question is what are the pros and cons of going with ARM which has even lower rates than 30 year mortgage and then continuing to refinance? In this environment of ultra low rates that continue going lower, such refinancing strategy using ARMs would help increase cash flow, right?

Thanks,

Hersh

[Matt Vogt]

Anything is possible, however it's not likely for rates to continue decreasing, especially not in the long run

The pro of an ARM right now is that you can save a few dollars on interest, however the negative is that you'll be far more exposed to rate changes in the future. I would think that an ARM has no place in an investors toolkit at this point in time. They are useful when rates are high and you're expecting to re-fi or sell before the term is up. If you're planning on selling in 2 years, maybe a 3 year ARM would be a reasonable thing.. anything besides that probably should be on a fixed rate mortgage to keep a currently profitable investment from becoming a headache of a property that's hemorrhaging money due to climbing interest rates.