Re: How can mortgage payment be this low?

>>Both are a bad deal. You want a fixed rate mortgage.
>
>They are not _necessarily_ a bad deal.  Two scenarios come to mind.
>
>You're young and buying a house for the first time...
>
>The second scenario is you buy a house with an adjustable rate mortgage, and
>rates fall...

There is also third scenario that may not happen as often, but applied
to me.  You will pay off (or refinance) the mortage in a few years,
hence are only paying (low) interest for short period of time.

In my case, it was a timing thing.  I owned a house in MA and without
selling it, ended up buying a condo in CA.  Original plan was that I
would be in CA for only a few years (and economics of the housing
market made it cheaper to buy a low end condo than rent an equivalent
apartment).  Circumstances changed and possibilities of returning to
MA greatly diminished so I put the house in MA on the market.  Once
the house sold, I got my equity, and turned around and paid off the
mortgage on the condo.  Also, if I had held to my original plans, I
also would have paid off the mortgage by selling the condo in a few
years.  Either way, an ARM made more sense than a fixed rate mortgage.

--mev, Mike Vermeulen