Comments on: Jeff Brown on the Hazzards of Adjustable Rate Mortgages (ARMs) http://allfinancialmatters.com/2006/05/25/jeff-brown-on-the-hazzards-of-adjustable-rate-mortgages-arms/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Fri, 20 Nov 2009 19:56:44 -0800 http://wordpress.org/?v=abc hourly 1 By: Mike http://allfinancialmatters.com/2006/05/25/jeff-brown-on-the-hazzards-of-adjustable-rate-mortgages-arms/comment-page-1/#comment-5578 Mike Fri, 26 May 2006 19:23:22 +0000 http://allthingsfinancialblog.com/2006/05/25/jeff-brown-on-the-hazzards-of-adjustable-rate-mortgages-arms/#comment-5578 ARM's due pose some risk, but for instance, if you purchase a home that you know you will only be in for 4-5 years, a 7/1 ARM seems like a good alternative to a 30 fixed. I like Chris's comment - I am also a long time reader, great blog! ARM’s due pose some risk, but for instance, if you purchase a home that you know you will only be in for 4-5 years, a 7/1 ARM seems like a good alternative to a 30 fixed. I like Chris’s comment – I am also a long time reader, great blog!

]]> By: djb http://allfinancialmatters.com/2006/05/25/jeff-brown-on-the-hazzards-of-adjustable-rate-mortgages-arms/comment-page-1/#comment-5572 djb Fri, 26 May 2006 15:58:01 +0000 http://allthingsfinancialblog.com/2006/05/25/jeff-brown-on-the-hazzards-of-adjustable-rate-mortgages-arms/#comment-5572 True if you are smart and do your research ARM's can be great. Unfortunately too many people who get ARM's have no idea what there payment will be when it adjusts and all of a sudden can't make ends meet. Just look at forclosures. They are up 79% over last year. Not to mention the $1 Billion in loans that are due to reset in 2007. True if you are smart and do your research ARM’s can be great. Unfortunately too many people who get ARM’s have no idea what there payment will be when it adjusts and all of a sudden can’t make ends meet. Just look at forclosures. They are up 79% over last year. Not to mention the $1 Billion in loans that are due to reset in 2007.

]]> By: Chris http://allfinancialmatters.com/2006/05/25/jeff-brown-on-the-hazzards-of-adjustable-rate-mortgages-arms/comment-page-1/#comment-5567 Chris Fri, 26 May 2006 14:02:48 +0000 http://allthingsfinancialblog.com/2006/05/25/jeff-brown-on-the-hazzards-of-adjustable-rate-mortgages-arms/#comment-5567 First time poster, long time reader... I agree with Rob, I personally have an ARM Mortgage on my house and I did it for several reasons. This is my first home, and although I could of afforded something more expensive, I went with an average priced home. In addition, to save more money, I took a 5 year ARM knowing there is little chance I would be in the house in five years. Also, I pay above what my minimum payment is and I invest extra money I save by not having a 30 year fixed. If your smart and do your research an ARM is a wonderful thing. First time poster, long time reader…

I agree with Rob, I personally have an ARM Mortgage on my house and I did it for several reasons. This is my first home, and although I could of afforded something more expensive, I went with an average priced home. In addition, to save more money, I took a 5 year ARM knowing there is little chance I would be in the house in five years. Also, I pay above what my minimum payment is and I invest extra money I save by not having a 30 year fixed. If your smart and do your research an ARM is a wonderful thing.

]]> By: Rob http://allfinancialmatters.com/2006/05/25/jeff-brown-on-the-hazzards-of-adjustable-rate-mortgages-arms/comment-page-1/#comment-5535 Rob Thu, 25 May 2006 19:09:08 +0000 http://allthingsfinancialblog.com/2006/05/25/jeff-brown-on-the-hazzards-of-adjustable-rate-mortgages-arms/#comment-5535 I don't think the problem is as big as people make out. 2-5 years is a fairly long time, especially as you get out toward 5 years. At that point people can refinance and get a new teaser rate. As you mentioned, there is also the chance rates can go down, or at least stay the same. Many people also "grow into" their mortgages, meaning maybe affording the higher rate is a stretch now, but in five years their incomes have grown more than the relative increase in the mortgage. Finally, many people don't even stay in the same house that long and therefore don't have to worry about what happens when the lock espires. I don’t think the problem is as big as people make out. 2-5 years is a fairly long time, especially as you get out toward 5 years. At that point people can refinance and get a new teaser rate. As you mentioned, there is also the chance rates can go down, or at least stay the same. Many people also “grow into” their mortgages, meaning maybe affording the higher rate is a stretch now, but in five years their incomes have grown more than the relative increase in the mortgage. Finally, many people don’t even stay in the same house that long and therefore don’t have to worry about what happens when the lock espires.

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