5/1 ARM Refinance (and sell the property within 5 years)

[Angela Mast]

Has anyone refinanced a 30 year fixed mortgage into a 5/1 ARM? I'm thinking about doing this to significantly lower my payments for the short term. With a 5/1 ARM, the rate is fixed for 5 years (60 payments) and then goes up BUT I plan on selling the house before 5 years (most likely in 3 years). I'm looking for advice if anyone has done this and if it's worth it with the closing costs, or if there is anything else I should consider. Thanks!

Current loan scenario: Fixed 30 yr mortgage at 4.25% and monthly payment of $2,500

ARM 5/1 refinance: 4.25% rate and monthly payment of $2,021 (closing costs = $951 because they offer a guaranteed lender credit).

To me this is worth the $500 in monthly savings on the mortgage payment! There are also lower rates available, which results in lower monthly payments, but then you pay higher closing costs.