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Negative amortization, good point, that will bite you in the ass.
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Given which way interest rates are eventually going to head (and the speed at which I suspect they're going to do so), this shiuld be a MAJOR consideration... You think people are underwater now?!?! With one of these in a rapidly escalating interest rate environment I could easily envision a scenario where someone goes from being at or near the break-even point relative to inflation to being WAY behind the curve with one reset - as in losing 10+ years in a single reset.
I'm sure someone can come up with a scenario for which an ARM is appropriate but with current rates, I think a person would be insane to consider a non-fixed-rate product of some sort now, generally speaking.
For me, length of time in residence didn't factor in too much. If we move anytime soon, I plan on renting this place out as an investment property - a VERY large motivation for me to buy was to have an inflationary hedge against what I suspect are double-digit inflation numbers right around the corner (5-10 years at most).
Of course most people don't look out that far and only to next quarter or maybe next year...
Just get a 30-year fixed. I don't see anything in your original post that makes a case for doing any differently.