I still wonder how many people with Option ARMs put any money down. Why would you put down 5% or 10%, and then reverse all that equity downpayment by increasing your debt every month? (Option ARMs allow you to pay only some of the interest, so the part that you don’t pay is added to your mortgage balance, and your mortgage balance gets bigger every month. So any downpayment made is eventually wiped out. Once the loan gets 15% – 20% bigger than the original loan, the payment schedule goes up, and the borrower has to start repaying the entire loan, including the past interest and the principal.)

Anyone who cares enough about building equity and paying down principal to make a deposit, wouldn’t blow it by going negative-am, would they?