Some young home buyers get ARM’s, which are adjustable rate mortgages since they have a low introductory interest rate. The thinking is that they will earn more money in the future, so when the rate increases, they will be able to afford the new monthly payment. However, ARM’s carry a lot of risks and even though interest rates have been at historic lows for years, they are starting to creep back up. What happens in rates increase, but your home value falls? You’d be screwed. (more…)