05-30-2008, 05:48 AM
My standard response is "do the math". Excel is your friend. You haven't given us enough data to respond. You need to run several different scenarios making various assumptions about how long you'll keep the house, what the maximum and expected variable interest rate increases would be, what the extra cost of a refi would be, how much your improvements will increase your house's worth etc. The answer should then be obvious. In your calculations, don't forget to throw in the impacts on your tax deduction and the impacts of any major house improvements on your property taxes (that's right, in many jurisdictions taking out a large value building permit will result in a property tax reassessment...outrageous I say...I spend a bunch of money on improving the house and the taxman taxes me on what I put into it!!!!???).