5 year ARM vs high interest rate 30 year fixed

[Gustavo Gonzalez]

Hi all:

So I've posted a related question on this topic before so this is somewhat of an extension of that. To summarize, I have a total of 9 investment properties 2 of which have high interest rates at 7.875%.  One property is a duplex and the other is a fourplex.  I've tried tirelessly for the past 2 years to refinance to a lower interest rate but because my FICO is under 720 (715) I'm unable to refinance.  I have tried 3 different lenders and they all have come back with no success.   

So now this 3rd lender that I'm working with was able to find a loan 5/1 ARM at 4.5%. Adjustable rate mortgages make me uneasy especially since both of these properties I plan to keep for the long run. My lender of course says that once the 5 years are up I will be able to refinance - that's tough to believe because I haven't been able to refinance for the past 2 years.

So the question that I have is should I keep my high interest rates for now (properties are still able to cashflow) and try to refinance at a later time hopefully when my FICO is above 720? Or should I take the chance and go with the 5/1 ARM and try to refinance later? Another option is that I can take the opportunity of a lower interest rate with the 5/1 ARM and pay off both these properties in 5 years?

Thoughts/suggestions?

Thanks you!

Gus