Adjustable Rate Mortgages: Time to Reconsider?

Mark Shapiro, owner of a public relations company in San Diego, went shopping last month for a mortgage to buy a house near Poway, Calif. Shapiro, pictured left, had every intention of following his mortgage broker's advice and choosing a 30-year fixed-rate mortgage. But then he looked at the difference between what he'd pay in interest for that fixed loan -- more than 5 percent -- versus 3.8 for an 7-1 adjustable rate mortgage.

To boot, the 30-year fixed was going to require more paperwork, since Shapiro is self-employed. The adjustable rate mortgage was easier to obtain.

Shapiro also likes the idea of being able to reduce his mortgage principal. "I love being able to throw in extra money whenever I feel like it and watch my payments go down," he told AOL Real Estate. "If it is a good month, I can throw in an extra thousand or so. If it is a tight month, I just pay the regular monthly bill.''