You need to factor in the (interest-rate) differential, as well as the costs of refinancing.
They should calculate what their rate would be if adjusted in today's market and compare that with today's fixed-rate market and assess their personal situation. Do they have adequate funds to reduce or pay off their mortgage at the end of the adjustment period?
For the last couple of months, I've been contacting clients and giving them that opportunity. You're getting much more bang for your buck doing a fixed-rate mortgage than doing an adjustable-rate mortgage.
They figured they would be moving, downsizing or able to pay it off.
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