We’ve heard so much over the last several years about the evils of adjustable rate mortgages. If you are among the 6.5 million homeowners who took out a low-rate adjustable-rate mortgage during the housing boom, you’ve probably spent the last several years waiting for your day of reckoning to come. After all you’ve probably heard repeated warnings that when your ARM resets your payments would spike dramatically: an especially big problem if you used one of those low-rate ARMs to stretch for a home you could barely afford. The good news is that this has not come to pass. Adjustable rate mortgages have never been lower. Once a homeowner enters that adjustable portion of their loan they are seeing rate and payment decreases, not increases. And many of these loans only adjust once per year. But rates will definitely go up once the economy stabilizes. Some predict fixed rate mortgages will be at 5.9% by the end of 2010 and 6.3% by the end of 2011. So what should you do? In the short term (1-3 years) stay put. The cost of the refinance will be more than the benefit of a lower payment during that time. If you see yourself in your home for the next 3-5 years consider refinancing to a 5/1 ARM. If you see yourself staying put for 5+ years consider refinancing to a fixed rate to avoid those inevitable rate increases.