Comments on: Interest Only ARM - The STD of Mortgages http://thepennysaved.com/2008/03/19/interest-only-arm-the-std-of-mortgages/ Personal Finance, career, investing, retirement, saving and debt blog Sat, 11 Oct 2008 15:41:11 +0000 http://wordpress.org/?v=2.3.3 By: Mrs. Micah http://thepennysaved.com/2008/03/19/interest-only-arm-the-std-of-mortgages/#comment-734 Mrs. Micah Wed, 19 Mar 2008 17:46:00 +0000 http://thepennysaved.com/2008/03/19/interest-only-arm-the-std-of-mortgages/#comment-734 When the flipping market's in trouble, then there's just no point for them. I can see the attraction if you'd rather spend your capital on fixing up the house than on traditional mortgages if you're only going to spend a few months with the house. But that's the only thing I think they're possibly good for. And if the flipping market is down, then they're not good for anything. (I don't like IOs anyway, because there's no principle.) However, the worst kind is an IO ARM that allows for negative amortization (i.e. you don't even pay off all the interest every month and therefore your debt goes up). When the flipping market’s in trouble, then there’s just no point for them. I can see the attraction if you’d rather spend your capital on fixing up the house than on traditional mortgages if you’re only going to spend a few months with the house.

But that’s the only thing I think they’re possibly good for. And if the flipping market is down, then they’re not good for anything.

(I don’t like IOs anyway, because there’s no principle.)

However, the worst kind is an IO ARM that allows for negative amortization (i.e. you don’t even pay off all the interest every month and therefore your debt goes up).

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