ARM went down!

[MajorMike]

Oh!!!! ok, I understand now. Thanks for explaining. I had no idea the details behind why someone would get one...

[bkdone]

Never say never...

I didn't say I was an Angel....but an ARM is the kiss of death. It's like going into a casino, laying your life savings down and rolling.....
At least with a locked in rate, you know what you're paying at all times. Even though someone tells me what it will be like in 5 years, there is no way to tell. It's sad that these companies get away with this. How can you qualify for an ARM and not a regular mortgage? I thought an ARM was a choice.

ARM loans are not the devil...uneducated and impulsive buyers are partially to blame, as are the predatory lenders. If you taking out a loan that you can barely afford, AND it's an ARM...then yes...bad decision because 99% of the time your payment will increase. Many of these folks that are losing their homes could not comfortably pay for a home with regular rates, hence the ARM. Everyone relished in the lower payments, and not everyone asked the hard questions about "what if..." I knew the risks of an ARM...I read as much as I could about how they worked and asked for worse case scenarios up front. You have to really look at your situation and be honest with what you can really afford...now and 1 year...2 years...or 5 years from now. Build into that plan the unexpected...job loss...illness...new babies... Save for a rainy day, and dont stretch your budget to the max.

My husband and I purposely took out an ARM loan. It worked better for our situation because we knew that we'd be selling our house within a short time period. Granted, no one knew that the housing market would be so bad 2 years later, but it's still okay. Our loan will adjust in September. We hope to sell our house (not making much profit), or we'll refinance an stay in it.

The main thing is that we have maintained our credit, lived within our budget, and not drained our home of all of it's equity before this whole credit crunch. Sometimes it pays to be very conservative; we could have easily taken out every penny we had in equity. Many people did that, and now, in conjuntion with falling house values...they are stuck. I think a lot of people got caught up in the euphoria of how easy it was to get approved, and they fell in love with a house (that is of death...) and they did whatever it took to get that house... Yes, yes, yes...whatever it takes...

I too have a LIBOR ARM...my payment will increase, but only by approx. $100 or so. I dont mind simply because this loan allowed me to get out of CH. 13 HELL, and get on with the rest of my life. I still have equity in my home, and my credit has recovered nicely. ARM has been very good to me.

An ARM, like any other financial tool is something that has to be considered carefully...do your homework. It has its benefits and we are only hearing about how bad they are because lenders were handing them out like candy, and buyers did not fully understand or educate themselves about the 'what ifs' of ARM loans. Most people who are now in trouble with their loans can pull out their documents and see that there are no surprises there. Everything they said could happen...how the interest rate will increase...is in there. Lots of people didnt care what it took, they wanted the house and signed their names. No one twisted their ARM... Sorry...bad joke.

Again, I'm not saying that here were not those in the industry who did shady deals, but many are legit and we (consumers) foolishly did not plan or ask questions. So I say to you Major Mike...never say never. That is just my humble opinion.