Is it safe to get an ARM again?

[Peregrine Took]

We are retired (60's) and have found a condo to buy.

We can afford the 30 yr fixed but my husband is leaning towards going for a 5 or 7 year ARM. We've had them before with success (were able to re-fi before the interest rate increase hit us) and it would save us about $250.00 a month.

This is the one of the few areas in life that I am conservative (!) but I've heard so many terrible things about ARM's in the past few years I just have my doubts.

The condo is in a great neighborhood - one of those areas that has remained, price-wise pretty stable, and has only dipped down slightly (for example this condo sold for $375,000.00 3 years ago and now the price is $350,000.00)

Thanks for any help. The advice column below says they are Ok - but you never know....

http://www.bankrate.com/finance/mortgages/10-savvy-homebuying-tips-for-2010-1.aspx

[2Design]

1. interested rates are record lows - why would you do this?

ARMs are disasters unless you have a bubble. This bubble is still going down

It kinda made sense when interest rates were 15 to 18%

If interest rates are low, they can only go up while housing is going down

bankrate is a paid site by the banks

suze orman may be resource to check

asking anyone who can make money off of what you do - will not get you an honest answer

[2Design]

2. arms are never a good idea because you are dealing with loan sharks

[dixiegrrrrl]

3. Sorry for late reply.

NO way would I do an ARM.
The banks have been PROVEN to practice fruadulent mortgage/re-fi techniques
plus
with interest rates this low, and economy this bad, the smart people are predicting a rise in interest rates.
You want to re-fi into rising rates?
Do you have a reason to think that in 5 years there will be lower rates AND a good real estate market?


If I were to buy again, I would make sure a real estate attorney..a very good one....read all loan papers,
I would insist on a fixed rate, with 20% down, NO escrow, NO pre-payment penalty, the right to buy my own insurance,
the right to pay additional principal each month,
and then I would add an extra 100.00 or whatever you can afford to each months payment for the first 10 years.
You will save thousands in interest doing that.
We are saving 40 K in interest on our 30 year fixed by doing this.

Normally, 80% of interest is paid to bank in first 5 years of loan.

Just saying...