Many people took ARMs because at .50 less interest rate than a fixed rate loan (that was the average difference between a 30 year fixed and an ARM in my area), the person could afford to purchase more house.
(many are for three years) and it adjusted to today's rate--anywhere from 1 to 2% higher at first bump--and their monthly payment increases accordingly. Then add to the larger house payment the fact
that gas used to be expensive when it hit $1.50/gal. and now it's nearly double.
As far as interest only loans, it's worse. The people often put down
as little as possible--many are 100% loans--and they hope to get equity in their home by the value continuously raising over time as most homes did in the last ten years or so.
Yes. You're in a good situation, Bev. You intend to stay put, don't
owe much and don't have much time left to pay.
You know, the mortgage industry began offering 40 year amortization terms in the last couple of years--to again let people have the absolute lowest payment possible to afford to buy more house. My husband and I would laugh about it, we called them have-a-mortgage-payment-until-you're-95 loans and other appropriate names.
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