http://news.yahoo.com/s/ap/20060620/ap_o...DJlYmhvBHNlYwM-

NEW YORK - In 2003, Anita Britten refinanced her two-story brick cottage in Lithonia, Ga. using a hybrid adjustable rate mortgage, or ARM. Her lender reassured her that she could refinance out of the riskier loan into a traditional one when her interest rate started to reset.

Three years later, Britten can't get a new mortgage and her monthly payment has jumped by a third in six months. She can't afford her payments and may face foreclosure if her financial situation doesn't change.........(more in article link above)......


ARMs and interest only's are so foul and it's pathetic that so many people were tricked into getting them. I always warn against them no matter what. If you can't get a fixed just wait and save and repair your credit.
Mortgage brokers pushed these on so many people and I can't even begin to tell you how many people were told lies by these brokers just to get the deal. I've had to actually set people straight on this several times.

I have an ARM.

I have two arms.

Foreclosures MAY jump? Would you like a peek at the foreclosure lists for Las Vegas??!
--A

I have suggested ARMs for many clients after I find out what their plans are. True, for the run-of-the-mill homeowner who wants to be in their home forever and who has no savings, ARMs give no benefit other than lower payment.

To say with a blanket statement that they worthless 100% of the time is just plain wrong.

Like I said, I have an ARM on my home. The plan is to be out of this home by the time it adjusts. If not, I will refi or bear the consequences. I knew this going in, and weighed the risk and chose to go with an ARM.

In addition, I would venture to say that the majority of higher-end homes that are financed have an ARM in place. Are these successful people dumb? Are they easily misled? I would venture to say no. For those who are overly financially saavy, ARMs have made good sense. Since the rate hikes have made ARMs less popular, they may not make such good sense for the average home buyer.

If I were to purchase a home today, I would chose a 3/1 or a 5/1 ARM.

I have an ARM...

Why?

As a young person with a growing business who doesn't plan to stay in my home for more than 5 years my ARM provided me the opportunity to own much earlier than otherwise.

Not everyone needs cradle to grave protection from "eeeeeevil" people who want to earn "eeeeeevil" profits.

Most people were not tricked into thier ARMs. The American culture is naturally optimistic and people expect to be in a better home, or in a better economic circumstance in 3-5 years. The fact is that the average home owner will move in 5-7 years. Have an ARM...use a little pre planning and foresight so you can refinance or relocate at the appropriate time.

However, if you get an ARM and destroy your credit due to other poor decisions, that can be difficult... DUH.

There's no reason to say no one should get an ARM. But it's true that many consumers get into things they shouldn't and pay later.
Nothing wrong with switching balances from a high-interest credit card onto a promotional-rate credit card. You just have to take care of your stuff and be savvy, and know what potential penalties are in place, and know when to move again or have a payoff plan.
Same with mortgages. Get an interest-only loan if it fits the bill. Get a prepayment penalty if it fits the bill. Get an ARM if it fits the bill.
But since we are inundated with consumers who do not plan, but merely jump on a product which will allow them to move into something they can't afford, we are inundated with foreclosures as well.
--A