In article ,
Thrasher Remailer wrote:
From what I hear, it is a ripoff?

Not necessarily, as long as you KNOW what is going on.

Briefly, it is a loan where the interest rate changes periodically.
Every 3 months or 6 months or whenever it "adjusts", giving rise to the
name. (ARM == Adjustable Rate Mortgage). The new value is calculated
from an index (there are many many indexes it could be based on) usually
plus some fixed value. Some of the possible indexes are better for the
consumer than others. Example: 11th district cost of funds (find it in
the newspaper or online) plus 3%. Adjusted every 6 months. Maximum
change 1%. The maximum change (the lower the better for you) says that
in a given adjustment period the rate can't go up or down more than 1%
even if the index goes up more. Some ARMs will have a lifetime cap,
which means that it can't increase past (say) 6% more than it was initially.

If I was seeking a mortgage, I might be offered an ARM which is initially
5% or a fixed at 6%. I would take the fixed unless I was VERY sure that
the index would go down or hold steady or I expected to be in that house
a relatively short time.

--
Rich Greenberg Marietta, GA, USA richgr atsign panix.com + 1 770 321 6507
Eastern time. N6LRT I speak for myself & my dogs only. VM'er since CP-67
Canines:Val, Red & Shasta (RIP),Red, husky Owner:Chinook-L
Atlanta Siberian Husky Rescue. www.panix.com/~richgr/ Asst Owner:Sibernet-L