2006-09-05 12:37:55 · 7 answers · asked by capaldi30 1 in Business & Finance ➔ Credit
Depends upon your goals. You don't mention what they are, so it would be hard to answer that question.
If you only pay the interest, you will never pay the principle down, and could be left with a large, single payment at the end of the mortgage, which may be difficult to do.
If you are planning on "flipping", or selling the property in a short amount of time, then it really wouldn't matter, since in the early life of a loan, most of the payment is going to interest anyway.
2006-09-05 12:46:06 · answer #1 · answered by Michael 3 · 0⤊ 0⤋
NEVER. Interest only mortgages are terrible. They allow people to buy more house for their money, when they could not afford it with a conventional fixed loan. The principal that you would have paid gets added to your outstanding balance each month. Over time, you will owe more on the mortgage than the house is worth.
2006-09-06 12:39:15 · answer #2 · answered by Steve R 6 · 0⤊ 0⤋
Pending on what you want to do.
If you know you are not going to keep the house for a long time then, interest only may be a great fit. You will have to understand the interest only term (how long will the rate be fixed before it jumps to market's rates). Otherwise, you may be in a huge shock. Just ask those who purchased huge homes some 2-5 years ago under this assumption. How much they hurt now!
Otherwise, it is not. This is especially true when we are in a economic climate in which the prime rate (rate established by the bond market in general) is fairly high ( I believe it is around 7 to 9 percent now). All adjustable rates (known as unsecured loans) are connected to the rise and fall of the prime.
2006-09-05 19:56:54 · answer #3 · answered by Anonymous · 0⤊ 0⤋
for the first three years of your mortgage ( 30 yrs mortgage) you paying down about 1% of the principal per year. you need to decide if interest only mortgage is good for you or not.
with interest only mortgages you can always apply extra money towards your principal.
2006-09-06 16:00:52 · answer #4 · answered by bianca 4 · 0⤊ 0⤋
Only if you plan on refinancung your mortgage or staying there a short time. It isn't practicle if you want to own the home and pass it on to your kids or keep it in the family. We've gone both ways, and I think from now on I'm going 30 year fixed.
2006-09-05 19:56:58 · answer #5 · answered by clnheart 2 · 0⤊ 0⤋
Yes! and interest only mortgage can be a very practical tool. However consult a professional before going that route. You can find yourself in over your head if you don't educate yourself first.
2006-09-05 19:43:35 · answer #6 · answered by RscuRngr 1 · 0⤊ 0⤋
NO!
2006-09-05 19:44:49 · answer #7 · answered by Anonymous · 0⤊ 0⤋