We got a 5 year ARM on our Park City condo, thinking there was no way we would own it more than 5 years. We would eithert lose interest and sell it or love Park City so much we would build a house. We never thought about the market collapsing and not being able to sell the place.
Six months ago, the rate adjusted for the first time. Crap! We were used to paying 5.25% which was pretty sweet. What did it adjust to? 2.75%. Now that's an ARM!
Well, it turns out that the rate adjust every six months, not every year. We got the latest notice with a bit of dread. The new rate? 2.25%.
How cool is that? Wish we could lower the mortgage on our house to 2.25%.
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ARMs are great until there is rapid inflation. The Fed has dumped more than 1.2 T$ into the banks. With the quantitative easing that has occurred around the world, hyperinflation is a real possibility in the future. Hope you have some cash reserves to pay off the loan.
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