Interest-Only Loans
You may want an i/o if you:
-Are disciplined with money
-Are a risk taker
-Aren’t taking on more than you can handle comfortably
-Expect your income to rise sharply in the next five years
-Have an irregular income (like commissioned sales) so that the lower payment is manageable during lean periods and when the money is coming in can pay down the principal
-Are content to let rising markets build your equity for you
-Are confident that home prices will continue to rise
You don’t if you:
-Have a lot of consumer debt you can’t get a handle on
-Plan on being in your house longer than the interest-only period
-Are undisciplined with finances
-Are borrowing a small amount
-Plan on spending the extra cash on “discretionary” items
-Plan to sell or refinance before the interest-only period ends
-Want to lock in today’s low interest rates