Adjustable rate mortgages? Do you understand them?

I just read the first part of a two part article on ARMs. A lot of the disaster we have been facing in the housing markets has been attributed to subprime and adjustable rate mortgages. All of the exotic loans that were widely available a couple of years ago were created with some very valid purpose in mind. I purchased my current home with a “no doc” loan. I was buying with a very short term time horizon. I had a house to sell, and I needed to extensively remodel the new house before moving in. My son recently refied an ARM loan that he had had for several years into a fixed rate moprtgage. Neither of us has missed payments or been foreclosed, but a lot of people have. A lot of people only had a one sentence explanation of their ARM note before taking one. There is a purpose for them and circumstances where they are useful. Be sure you understand them before signing up for one.

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