I have a 15 yr fixed rate mortage with 8 yrs left. I owe $120K. I can refinance to a no cost 7/1 ARM at 2.75%. If I continue to pay my mortgage at my current rate today of $1606 (P&I), I should be able to pay off my mortgage in 7 yrs, cutting of one entire year from my current 15 yr fixed rate. Make sense?

The "No cost" refinance concerns me...This may not be an out of pocket cost...But the Mortgage amount may increase...Please proceed with caution...Ask questions...Obtain written documentation as to the total transaction...Feel free to contact us with any questions. Ron -- 856-853-1234 -- Money@RonWohlfarth.com

This makes all the sense in the world to me... But, like Ron Said... look at your loan amount and compare it to your pay off balance. You can also credit any escrow refunds you might receive, and use those numbers to see if it truly is a no cost loan. Your lender should have provided you with a Good Faith Estimate, but you also want to ask for a Initial Fee's Worksheet... this worksheet will have all the numbers you need to determine if this is the type of loan that's being pitched to you... WilliamAcres.com

Be very skeptical of "no cost" loans. Also,with a 7/1 ARM its amortized on a 30 year schedule. So you wouldn't actually be cutting 1 year off. If you would like me to explain further feel free to email me at cbarcus@gmx.com or cal me at 412-328-3241.