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Interest only question:
I hear interest only loans are bad, are they?
Interest only loans allow you to make low monthly payments. If the low monthly payment is more important to you than paying off principal in your house then it is probably a good option for you. One of the primary reasons an interest only loan would not be good is if you have to sale your house and your house is worth less than what you owe on your loan. This is occurring today some folks purchased houses a year or two ago and the value hasn’t gone up and they need to sale. Well they can’t sale the house because they can’t pay their loan off. This also occurs when homebuyers get second mortgages and need to sale their house.
However, if your home increases in equity, which is often times expected, then this loan can be a wonderful way to save on a monthly basis and keep your payment low.
So the bottom line is that interest only loans are not bad loans if you are still able to sale or refinance your house when you want or need to.
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