We want to refinance; currently at 6% on a 30-year fixed. We are unsure how long we will be in the house but assuming at this time we will want to move within 7 to 10 years. We are offered a 3.75% variable (7-year ARM) with low closing costs. We have a relatively low mortgage (under 175k). I am the sole breadwinner and had originally thought to keep monthly costs low. However, I know in refinancing we will be paying off less of the principal. Would it be more advisable to do a 15-year fixed given how low the rates now are and try to pay it off more quickly? I realize of course our monthly payments will be higher. Or would I be just as well off by overpaying on the variable rate. Am I correct on assuming a 30-year fixed doesn't make sense if we plan to move within 7 to 10 years?
Much thanks for any advice.