Keeping your important income tax returns for at least 15 to 20 years shouldn't be a severe burden. I keep mine in the garage where they don't take up much space. But I know where they are when needed.
'Teaser' Rates on ARMs Come With Drawbacks
Q: We are in the process of buying our first home. We can obtain a fixed-rate home loan at about 6.75% interest. But the mortgage broker offered us an adjustable-rate mortgage at 4.5% interest. The monthly payment is much lower. The adjustable interest rate is tied to the Treasury bill index. Is a fixed-or adjustable-rate mortgage best today?
A: I suspect that ultra-low 4.5% interest adjustable-rate mortgage (ARM) is just for six to 12 months. It's called a "teaser rate." Did the lender tell you the ARM index and the margin? After the initial teaser period, the ARM interest rate will probably jump to near 6% interest.
That isn't much less than the 6.75% fixed interest rate, which is an excellent bargain. The big drawback of an ARM is the interest rate risk shifts to borrowers if interest rates rise, as they eventually will. In today's home loan market, most borrowers are selecting fixed-rate home loans because there is no interest-rate risk of rising payments for the borrower.