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Originally Posted by redrider  I manage an escrow company in california and I see interest only loans all of the time, in fact I have one on my house and wouldn't go any other way. It keeps the payments low and you can always put extra (like another hundred a month) if you have it, towards the principal whenever you want. Even if you have a prepayment penalty, which most interest only loans have,most prepays let you still pay down the principal every month if you want, as long as the total prepaid amount doesn't exceed 20% of the outstanding principal a year (which most fully amortized loans don't even do!). Just be sure to read the prepay clause and make sure you understand it. Good luck and go for it!  |
I think California is different than the rest of the country. Housing prices there just keep going up. Ours are flat right now. I don't know about Arizona but that's something to consider. If you get a 100% interest only and then the house doesn't increase in value, you won't have enough equity when you go to sell.