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ARMs are fine if you'll live in a house less than 10 years. If you won't live it in long enough to enjoy it, its better to just pay the interest until you sell. When you do, it should be enough to pay off the mortgage balance thanks to real estate appreciation. On the other hand, of you plan to stay in the home the rest of your life, a conventional fixed rate mortgage is definitely the route to take. There is no single mortgage product any more since every home buyer's needs are different.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus

ARMs are fine if you'll live in a house less than 10 years.

Unless you bought at an inflated priced fueled by money that interest-only ARM's put into the hands of people who cannot afford those prices.

Interest-only mortgages were designed for wealthy families who used the loans as cash-flow management tools and could, if necessary, pay off the entire sum by liquidating some stocks and bonds. ........Trouble is, the sheer numbers indicate that the loans are also being taken out by a much bigger sector of the public -- people who are struggling to get into a rising housing market and feel that they couldn't get the properties they want any other way. ........"In most of those cases, buyers have no idea how they're going to pay" the higher payments that will be owed once principal payments begin, says William J. Pulte, founder and chairman of Pulte Homes

Then, even if you have cash in the bank to purchase a house outright, you are getting poor value as the price is being artificially elevated by the irresponsibility of others.

If you won't live it in long enough to enjoy it, its better to just pay the interest until you sell.

However, the artificially inflated prices are making it impossible for many people to afford the payments on a fixed mortgage when the people bidding against you are getting easy money from interest-only loans.

The choice for new buyers is now either a risky interest-only loans with low monthly payments (until it blows up in your face and drives you to foreclosure) , a conventional loan with prohibitively high monthly payment or, as buyers are now doing, saying "No" to prices that they can only afford by putting themselves in either one of those two bad financial positions.

Once the interest-only grace periods begin to expire by the tens of thousands, the foreclosures will begin and the seller will have the choice of either losing money or bankruptcy.