Interest-Only Morgages

[Tecmo]

Anybody look into interest-only morgages. A friend of mine is thinking about changing his current traditional mortgage and going to an io mortgage. Then taking the money that would go towards the priciple and investing it.

 

[NorthernStar]

My favorite town of all time, love the name.

Not a bad plan if they are disiplined enough to put the money away. Even better if they have a 401k plan with a company match they are getting.

Downside is the rate is usually higher. If you go to sell and price of the home hasn't appreciated you could be in a bit of a pinch. May not be worth the price to refinance if your current rate is decent.

 

[DFWLoanOfficer]

It also depend on how long you live in the house. If long term interest only doesn't make sense.

 

[sunnyblue100]

IO is for ppl that expect to make significant more money in the near future.

 

[Tecmo]

My favorite town of all time

My guess is that you when to college here right?


Thanks all for the info.

 

[TTinCO]

They are great if your market is appreciating, and can be catastrophic if home values are falling.

If your market is doing well, and not showing any signs of collapsing-save your money & go with an IO.

They are also good for home flippers who are vested in more than one property.

If you're careful & don't end up "upside down"(Owing more than the place is worth), they are absolutely awesome.

:toast:

 

[raidermattk]

My parents bought about 10 rental properties about 10 years ago on interest only loans. The rent on each house was roughly $500 more than their payment and the houses appreciated about 50% in eight years. Needless to say it worked good for them.