Re: How much can I afford to pay in rent?
ARMs do have a lower interest rate but rates are arising and will continue to do so for the foreseeable future. The .5% difference with a ARM as compared to a fixed rate mortage will quickly disappear and your monthly mortgage payment could balloon to an ugly number.
The promblem that I have with ARMs is that people are using them because they barely have the means to afford a house. Through ARMs, people are over extending themselves and buying more then they can afford. If you are already over extended when you first buy a property, it can get really ugly when interest rates start moving in an unfavorable direction. Before you know it, your mortagage payment nearly doubles and your left unable to make payments.
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