Interest only mortgages

[Bruce Wayne]

In order to get on the housing ladder would you consider an interest only mortgage?

[Tree0164]

No! I think the 30 yr or the 15 yr mortgage is the way to go. Of course putting down a decent downpayment is a must.

[NoWayNovember]

No, I wouldn't. We're closing on our first house a week from today with a 30 year fixed. Interest only isn't doing anything to reduce the principal!

[tgavin71]

If I had no other option and the house was great value then yes I would but would restructure to a "normal" loan as soon as possible.

[34saving]

I think it's important to consider all of your options. Under some circumstances I'd do an interest only loan. (Those circumstances would have to be pretty special though!)

[dealsaver]

I sincerely regret not getting an interest only mortgage. The money I pay towards principal would be better invested elsewhere. Mortgage interest attributable towards the purchase of your home is one of the few deductions allowed under the AMT. When my spouse and I bought our home 6 years ago, we had no idea that we would be up against the AMT. The expansion of the child tax credit and other tax cuts passed since we bought our house have been great for our family, but now we are flirting with the AMT. As with everything, you have to look at what the best use of your money is. Directing money to other investments rather than paying down our mortgage would be the best use of our funds right now. Tax laws change though so we might be singing a different tune and be happy that we paid off our mortgage by our mid-forties.

[Ima saver]

No, I hate paying interest for anything. I don't know how I do it, but I manage to pay things off much earlier so I won't have to pay interest.

[billybob]

What about a piggyback loan?

[boefixepa]

Personaly..I weighed the risk and took the interest only loan, but I have an option for a 15 yr payment built into that. The property vaules are going up about 1% a month were I live and I got a great rate, and a friend did the loan so the fees were minimal. I take the difference now and am looking at the best savings/investment. It also gave me a chance to take over my escrow and earn interest on that too. Overall my out of pocket expenses went down. From about 1,400 a month to 650. That gives me ALOT more money to play with. I'm very carefully watching it and I'm not unaware of the risks. Basically I am paying rent that I can write off on my taxes. This is not the house I want to die in. It's an investment.

[baselle]

No way. I just don't like those types of financial surprises.