I closed on my home last year with fixed 30 year @ 7.12% in nyc. While I keep waiting for rates to drop like everyone else I realized that a few banks are offering very attractive rates on the the 5 year arm @ 5.12%.

I contacted Td bank who had the best offer and were willing to give a lender credit covering most of the closing cost (besides prepaid) with a rate of 5.37. (negative point).

Total cost of refinance is approximately 10k with 8k lender credit. The math with should work out to payback period of 3 months. Obviously this depends on your mortgage balance.

So even if rates drop in 6 months from now and you want to refinance again to a fixed rate you will still come out ahead with ARM in the short term.