No two borrowers are the same, have the same qualifications or the same goals.
Stop listening to your friends and family and start learning! An "option ARM" gives you 4 ways to pay your mortgage. Three have too high an interest rate in most cases, and the fourth one can really get you in trouble unless you are in a low interest rate environment.
Do you even know what you need to look for in the loan to protect yourself? The margin!
Each month you take the value of the index (monthly treasury average, LIBOR prime, etc.)
and add it to the margin to determine the interest rate. When you start getting margins above the low 2% range you can see how fast the interest rate can go up. If the index is at 4.75% and you add a margin of 2% your interest rate is 6.75%. If the index goes up 1/4% then your rate will be 7%. If you margin is 3.75% then the 6.75% interest rate mentioned above is 8.5% and when it goes up 1/4% you are at 8.75%. Is there any wonder why you have the amount of negative amortization (rising balances) that you have? The amounts being added to your balances are unpaid interest (negative amortization), which is added to principal and forces you to pay interest on interest. No one should ever have to do that.
Whenever the Federal Reserve raises the Federal Funds Rate (the interest rate member banks charge each other to borrower "over night money"), banks generally move the "prime interest rate" (interest charged to their best customers) the same amount in the same direction. Home equity lines of credit are the beneficiaries of these moves because the prime rate is used as their index.
Adjustable rate mortgages can change monthly, semi-annually, annually or be fixed for 2, 3, 5, 7, 10 or 15 years before they begin to change. There is a place for all of these types of loans and you need to know which would work best for you, if any. The longer fixed term arms work for most people because of their tendency to need money, the variation of interest rates over time and the fact that people have become more nomadic and move more frequently than their parents.
You may have just learned one small fact or several but at least it is a start. You really need to know because the financial world acts like a police officer: failure to know the law is not an excuse. Failure to know how your mortgage works generally doesn't get your money back in case you get caught in the "sub-prime" mess or anything that might be similar.