In what situations is it favorable to choose an adjusted rate over a fixed rate?

Question

especially when one can always refinance if rates drop

Answer 1

If your credit score and income can qualify you for a fixed rate it is usually wiser to go for it. The way the market looks right now rates are inching higher and higher and most people are trying to get out of an adjustable rate mortgage. Best of luck to you.

Answer 2

There is no favorable situation for an ARM. Just ask all of the folks being foreclosed on because their property is not worth what they owe and they are unable to refinance. Here in FL there were more than 25,000 foreclosures last month alone.

Answer 3

ARMs are the major cause of the high rate of foreclosures every day in america...also is resulting in many mortgage companies going bankrupt and being federally investigated.

while you may think you will be able to refi...think about that statement again....while your interest rates continues to climb and so will you monthly payment...currently property values are falling falling falling!....so tell me how you can refi when your property isn't even worth what your current loan will be? you can't...and that is why these ARMs are resulting in foreclosures.

also...do not listen to anyone here on the net that says "email me, i can help you".....no they can't...and you will only get yourself deeper or lose your identiity to them

so bottom line...go with a traditional loan:
min. 20% down, 30 year fixed rate, no prepay penalty...
trust us all..."You will be happier"

good luck

Answer 4

Generally, it is not a bad idea to have an adjustable if you are going to move within the next five years.

Answer 5

I cant imagine not choosing fixed always