Risks As Chance of Loss

Granted, the monthly payment on your ARM could climb above the amount of your fixed-rate monthly payment, but if you follow the advice of Secret #31, you can squash that possibility. Still, for the sake of argument, assume that it does. Have you really suffered a loss? Not necessarily; to calculate "loss" in this sense, you would need to total all of your interest paid compared to the amount of interest you would have paid with a fixed-rate loan. Experience shows that throughout most of the past 25 years, borrowers who chose ARMs paid less total interest for the same amounts borrowed than their 30-year fixed-rate peer group.

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