Interest only mortgages can be very dangerous so please be careful. A lot of people are losing their homes right now because they took interest only mortgages out a few years ago and now the terms are changing, the upfront 'teaser' rate is gone, they've paid nothing towards the principal on the home, the property value didn't rise like expected and they can't handle the new payment. If you're planning to refinance in a few years anyway why not check into a balloon mortgage? You borrow the money for 3 or 5 years but the payment is figured just like it's a 30 year loan so it's not bad...at the end of the 3 or 5 year term you refinance at the current interest rate. At least that way you would be paying something towards your prinicipal and not just the interest. You can also get a little better rate on a balloon as apposed to a regular 30 year loan. Your best bet would be to sit down with your banker or mortgage broker (if you haven't already) and see what would be best for you...now and in the near future. Have them figure the $$ you would save on the mortgage verses what it will cost you to refinance again in a few years. Sometimes things look good in the beginning but if you really look into them it's not such a good deal. If you can't afford to pay the full amount now are you sure you'll be able to a few years down the road?
Good luck with your decision! |