Are interest-only mortgages a good idea? Looking at some Ads that I've seen, it seems to make the house more affordable, but I'm wondering what the drawbacks are in the long run.
It depends. If you live in a market that your home is gaining equity quickly...it can be. With interest only you will not pay down your principal loan balance each month. If you are in a situation that your income is growing and you can make principal payments down the line but are not comfortable yet it's great program. You can ALWAYS pay down the principal each month or at any other time. If you are self employed and income varies it is an awesome option. There are great loans out there that offer an adjustable rate starting at 1.25% and give you an option every month of minimum, interest only, a 30 year principal and interest or a 15 year principal an interest. It gives you options. I think it's a great option!!!
Thanks for the reply. I'm currently on a mortgage, paying principal+interest, but thinking of refinancing. I'm also looking to get into investment properties; buy them, and rent them out. The ads I'm talking about, of course, were published as such so as to attract attention... and they did. So are you saying that I can go for an interest-only loan, but I can always pay more and the money would go to principal? That is, I have a little more flexibility in what my payments are every month? Also, would this type of loan be appropriate for an investment property?
