“I read in the Union that interest only loans can be risky. I mean you’re not paying your loan down, so in 5 years you’ll still owe the same amount of money. Do you think they’re a good idea?”
***ANSWER:
It depends. These loans can be good or bad depending on your situation.
They can be wonderful if your dream home is otherwise just out of reach and you see your income increasing and you plan to make principal payments as your income goes up.
Or they’re great if you have some fluctuation in your income. It’s nice to have the safety valve of lower payments if things get tight.
Think twice about buying with the most liberal interest-only low-start-rate loan if you have no plan, no expected income increase on the horizon, and little savings.
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