Are there any pros to adjustable rate mortgages,all I hear is horror stories about the increased payments
by 
Feller
ANSWERS: 3
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If you are the mortgage holder, why yes there are a lot of pros. If you are the mortgage lender - it will lead to financial ruin. In other words listen to the mistakes of others (horror stories).
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ARM's are good when the real estate market is good in your area - meaning that if interest rates drop after a few years of owning your home it's possible to refinance and not have to worry about the incresed payments. However - if interest rates are on the rise, and you have already refinanced then there will nothing you can do but to pay the increased amounts. What happens is people buy a house and refinance immediately to pay off the car or student loans - then when the payments start to increase they want to refinance again but there is no more equity to refinance so they get stuck.
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Sometimes you can get a lower starting rate and if you are very likely to only keep your house for a few years then this can be advantageous. And of course interest rates can go down not up, in which case its possible an ARM will actually cost less. Most of us don't like that uncertainty and its much better to have a fixed rate long term mortgage - becuase we still have the option to refinance that if rates go down but we are protected if they go up.
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