Cooprider,
Your question would require a book. There have been so many different kind of arms, interest only, hybrids ect.
“Over the 30 year life of a loan, what costs more: ARM or fixed? Say it’s a 3-year ARM that started 3 years ago, and just reset. If I recall, a 30yr fixed ends up costing around double the purchase price. What about an ARM?”
In a low interest rate enviorment like we had and have had it is impossible to touch a fixed loan for value over 30 years. The exploding Arms will eat anybody alive. That’s why many mortgage people coaxed borrowers by telling them that they would easily refinance after a few years. Only the most naive and compulsive would have taken these loans without that promise. So they were naive,compulsive and gullible perhaps.
The Teaser ARM’s mostly worker for flippers and people who used the leverage wisely, who didn’t get caught in the price freeze and decline. I don’t know who else, maybe a few people that used the temporarily discounted money to finish school or start a business.
Interest only is a different animal but there are many species. As dpsvend said,apparently it is the Loan of the day. Depending on the species, they cost as much or more over the 30 year life of the loan. Anybody going interest only should find out what kind of a “hybrid” loan it could be.
Unless someone is so rich that they can be frivolous with hundreds of thousands of dollars, It is a bad time to buy a house and therefore a bad time to get a loan IMHO, regardless of how much you do or don’t understand the different ones. The message I hear in advertisement is “IF you only know how to get the right loan everything will be O.K.”
Buying at the right price and time will take care of little glitches in the loan. That is not to say that you don’t want to try to get the best one at the time.
