Greenspan recently wrote an article (UFB! with coauthors) about how overpriced 30-year fixed rate mortgages are relative to ARMS. Rates may spike for a couple of years, but, over 30 years, you are much better off with an ARM, IF you have the cash reserves to cover any spikes.
>Greenspan recently wrote an article (UFB! with coauthors) about how overpriced 30-year fixed rate mortgages are relative to ARMS.<
With rates still near historic lows? I look at a fixed rate on a mortgage as a kind of insurance against the possibility we get another disaster of a president, a la Carter, and that interest rates spiral back into double digits.
I don't understand why Greenspan would write that. When we bought our house, a senior relative told us that he bought his house in the 1940s at 4% interest. I was flabbergasted and thought we would never, ever see those days again. Lo & behold, we did see those days after all. Why would I want an ARM when the interest rate is at a 60 yr low?