Quote:
Originally Posted by irishgrl
well, the reason the foreclosures are up is because buyers were being offered deceptive financing and they figured they'd be making increasingly more wages to offset the anticipated increase in interest from the ARM. Sadly, jobs are going away or being outsourced or eliminated due to budget cuts, and people are left holding the bag. People in the Bay Area who USED TO make good $$$ either have only one income left to do the work of two or in some cases, no income at all. Its just not realistic. I HATE HATE HATE ARM's. I dont believe in gambling with your HOME. you need to know up front whether or not you can afford something, and if you cant, then WAIT!!
some people cry the blues because they took the bait and then suffered an economic loss or had to pay increasing interest (surprise!) that they signed on the dotted line for, and I say its just criminal what I've heard agents get away with. The weird thing is, people get all feverish when they have a home on the line they are in love with and they indulge in this "oh I know we can make it work, we'll save here and scrimp there, and you're gonna get a raise, and really, how much can the interest rates rise anyway" attitude, and boy are THEY in for a shock.....
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Anyone who argues they did not know up front that their ARM could rise in three or so years is liar - it says so in the documents they sign. In fact, it says so in like five of them and I believe there is a special document explaining it
As for gambling with your home, you should not. But, not all ARM's are that. If you can aford the initial payment and that initial payment can save $300 a month for three years in an ARM and then after the third year, your pmt goes up $50 a month for the next two or so years, then you have not lost money nor have you gambled
Rather, you have been a smart investor. Plus, they can always sell the house at that time for a significant gain in the current market and buy a less expensive one if it comes to that.
But, many people cannot see this and they think paying that $300 more a month is the right and smart way to go. If that works for them, then great -- but that comfort zone does not equate to a smart shopper.
Actually, the smartest thing to do is take the ARM and put that extra $300 a month of "free money" (you pay no interest on that money "borrowed" ) on the mortgage -- that way, in three years, you owe about $4,000 less on your mortgage.