Real Estate Advice

[Schneed10]

Originally Posted by FRPLG

Yeah. If you are a current home owner and have an ARM I apologize in advance but in my opinion you have made a very bad move. ARMs are hideous creations by banks to be able to offer more loans for more money to less qualified people. To do so they have to offset all of their increased risk somehow so that should clue you into how bad ARMs really are compared to standard loans. Right now all the people who jumped into an ARM 4 and 5 years ago are starting to really realize what kind of problems they can cause. Avoid them at any cost. If you have to hold off on buying a house or have to buy less house then do so. But don't jump into an ARM so you can qualify to buy a $500,000 house. Buy a $250,000 house wait 2 years and sell for profit(hopefully) then take your increased equity and move up. It is the safer and less expensive way of doing it over the long haul. And when it comes to primary housing you are ALWAYS talking about the long haul.

Concurred. ARMs are a contributing factor in all the subprime mortgage lending problems that are all over the news right now.

Adjustable or balooning rates put your cash flow at risk, big time. If something goes financially wrong in your life, the last thing you would choose to part with is your home. But by using an ARM or a baloon, you're exposing yourself to the risk that the FIRST thing to go in a crisis will be your house.

The potential of taking a bath is significant. Take the fixed rate; you'll know exactly what you need to pay each month. And it ensures that you won't buy a house you can't afford.