Trading Fixed For Adjustable

Patricia wants to do something staggering ... trade in her fixed rate mortgage to get an adjustable rate!

QUESTION: Patricia bought a home a year ago at a 6.5% fixed interest rate. She’s considering an adjustable rate mortgage because the payments are cheaper, and could cap at 10%. What does Dave think? Dave almost laughs at this one.

ANSWER: They are cheaper today, but from there they will adjust up. So what if it can’t go above 10% … WHOOPIE! You’ve got 6.5% now! Adjustable rate mortgages are an awful product. Stay with what you’ve got. Love the stability that you have, and don’t put your home at risk for a point.