After all this time, and all that we went through, it seems that all these big lenders care about is pushing product without any concern for the consumer borrower. Yes many consumers are sophisticated, but even those that are can be persuaded to take mortgage products that just aren't good for them. I have over 20 types of mortgage products and show you the positives and negatives of each one. The problem is, many mortgage loan officers seem to just "accentuate the positive!" I received and email today from one of my wholesale lenders and this is an excerpt:

"Did you know?

Choosing a 5/1 ARM instead of a 30 year fixed rate mortgage could enhance buyer affordability by about 15%.*  This is due to the ARM having a lower interest rate and lower payment versus a 30 year fixed rate mortgage during the initial fixed rate period (5 years).  

As interest rates trend upward, the ARM share of purchase mortgage applications increases as more buyers opt for the lower rate and payment of an ARM."

Now, while I understand that they mean to help us sell mortgages, zoom down on the sentence of affordability by about 15%*. What this means is that the borrower can qualify for more mortgage, more debt, right now, but where does it say make sure you take into consideration the probability of future earnings. Take a look at the next paragraph and the sentence purchase mortgage applications increases. If interest rates are moving up, why should a borrower take an arm? Why should we let them bet that rates will be the same or lower in 5 years? What if rates really moved up in 3, 5, or 7 years?

My opinion is as follows: ARM's are good if: 

1.You get big bonuses.

2. Plan on inheriting money to and plan to pay your balance down.

3. Plan to sell your home before the rate can rise or adjust.

BUT NEVER take an arm just to slide into a property without a back up plan otherwise your bet may be detrimental to your cash flow. To be clear I am talking about residential 1-4 properties as commercial property financing lives in the adjustable rate world. Have a good day