Should you take an interest-only loan to buy a home instead of a standard 30-year fully-amortizing one?
I just had clients buy a house using one - and they're going to to save almost $1,000 on their monthly payment! BUT is this the right choice for everyone? Probably not.
This video discusses the issues and the things that must be considered (beyond just the monthly payment):
- Interest rate difference (interest-only loans have higher rates)
- Principal pay-down (the payment savings gets off-set by the balance reduction, especially after 4 or 5 years)
- Qualification issues (interest-loans can be harder to get approved).
For more information on the systems that I use and the extremely effective strategies I employ for both home buyers and sellers, please contact me.