Adjustable rate mortgages, ARMs for short, are the most misunderstood, misused, and maligned financial instrument.Â The have been abused by consumers, Realtors and loan originators alike these past 3-4 years and are now the subject of national scourge.Â Much like our Second Constitutional Amendment critics, the ARM critics are usually misinformed and preying upon the fear of catastrophe.Â
These inexperienced mortgage sales people or "loan hacks" as I like to call them, are banking upon your fear of catastrophe.Â Loan hacks sold you ARMs in 2003 and negative amortization ARMs in 2005.Â After they ride the fixed rate mortgage trend, they'll move on to reverse mortgages.Â They lack original thought and critical analysis.Â They'll sell you any loan that is on the front page of USA Today.
ARMs don't cause foreclosures, loan hacks cause foreclosures.
READ:Â Â I am an American ARMs dealer.
Fixed rate mortgages, for the lion's share of the population, are an inappropriate recommendation.Â Mortgage advertisers, unschooled in financial planning , are aggressively advertising fixed rate mortgages as a cure to the rising ARM rates.Â Â They're encouraging you to sell low and buy high.Â
SAY WHAT?Â Â DID THEY FORGET THAT RATES GO DOWN, TOO?
You should lock in a fixed rate mortgage at the..