Q: I am thinking about getting an interest-only mortgage for $320,000. It would have an interest-only period of 5 years and then convert into a 25-year loan.
Is this type of loan a good choice for me? How do you feel about interest-only loans?
A: I like interest only mortgages in several situations. They work for me if you’re trying to conserve the cash you have on hand for a home improvement project, or some other expense, or if you’re buying a real estate investment property and want to hold down your out-of-pocket expenses.
What worries me is when someone gets an interest-only loan simply because it allows them to buy more property than they otherwise would be able to afford.
I’ve got lots of stories on my website about interest-only loans. You may want to check them out.
Published: Jan 2, 2006