Quote:
Originally Posted by strandinthewind
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. |
actually, the problem out here is, the house payment takes two incomes and many times, people think their wages are going to rise with the interest rates, and sadly that doesnt happen. Thus, the bottom dropping out. Especially with companies cutting costs and outsourcing and eliminating positons and a hiring freeze and just a myriad of things that add up to a really BAD initial decision, betting on the come. (gamblers term for hoping to get lucky in future) It just isnt worth it. Most people dont have that kind of $$$$ to throw away but they THINK they'll be able to do it based on today's circumstances and a belief that there will be automatic raises etc.
Just BAD BAD policy.