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A few years ago I had become a flipper by accident, because a few life changes forced me to sell three houses in five years. My partner and I had an inkling that a move might be in our near future when we bought House No. 3, so we opted for an adjustable rate mortgage that allowed us to pay nothing toward principle and less toward interest than we were accruing monthly.

In plain language: We were going into debt - about $500 per month - even though we were making our house payments. We were renovating this house, so we gambled that by the time we sold it (or re-financed it), its increased value would make up the debt we were piling up.

The California real estate market was wilting when we put the house up for sale. After three weeks my nerves were shot. I had sprouted several dozen new grey hairs. The children in the neighborhood had begun to call me "that scary lady with the hedge clippers" since an obsessive belief in the power of curb appeal to attract a buyer had me grooming the yard maniacally in hopes of escaping financial ruin.

Then - miraculously - we sold the house! The moral of the story: I'll never use a chancy ARM again. My palms still get sweaty when I see a pair of clippers.

Go to "Home Finance Guide".

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