I agree with item 2 uncategorically. However, item 1 needs to have a caveat. First, there is no rate reset on a fixed rate loan. I consider an IO option on a fixed rate loan much less risky than on an ARM. Second, the expectation of a raise that never comes is only an issue if you’ve overbought and are overextended on your payments (where you really NEED the reduced payment in order to be able to keep afloat).
