>>>I have what is called up here, a 'variable rate' mortgage. I don't know if that's the same thing as your 'adjustable rate' mortgage, but it's worked out beautifully for me. I came off a fixed rate of about 6% when I changed to variable rate. When I changed, I decided to continue to pay the same monthly amount as I was paying - in other words pretending I still was at 6%. That was about 6 years ago, and at no time since has the variable rate come anywhere near 6% so in fact, I've been paying off my mortgage very quickly. Right now my rate is about 3.75% while I'm paying as though it's 6%. If I'd taken a fixed rate mortgage at that time, I'd be waaaay behind where I am now.
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>>You got lucky.
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>>As best as I can recall, a negative amortization loan had you gambling on the fact that you'd be making more money in 10 years, so while the interest rate might have been 12%, you were paying 10% and the interest left over was being added to the principle amount.
>>A lot of younger (early 20's) people got caught up in them in Houston - and then the oil bust hit, and then the shuttle blew up and everything slowed down economically and suddenly they owed 10's of thousands of dollars more than their house was now worth. If I remember correctly, though I won't swear I am, some of them were variable rate too....
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>Yes. I got that from Tracy too. These are two very different things. My variable rate mortgage simply means that for the term (3 or 5 years usually), my mortgage rate varies according to the prime rate. There is also a cap - in my case 7%. If the rate rises to more than 7%, my mortgage rate will stop at 7%. If you think the variable rate will rise above whatever the fixed rate is at the time, then you go with the fixed rate. I gambled that it would be lower than the fixed rate being offered and I won handily. A friend of mine wanted to go with a variable rate, but his wife wouldn't hear of it. So they went with the fixed rate and by the time their term was due, she was kicking herself.

I'm thinking that your 'variable rate' is different from our 'adjustable rate'. However, what you have described doing (continueing to pay as if 6%) is merely paying of the principle faster. At any time, I can send in 'extra' on the payment, mark it as 'principle' and it will apply. If I don't mark it as principle, the bank will assume I'm paying extra interest. Remember, when dealing with American banks, if you wonder what the banks is going to do, ask yourself the question "What will make the bank the most money?" .