Interest-only Loans

“What do you think of interest only loans? Don’t you think it’s bad idea to get a loan where what you owe doesn’t even go down?”

***ANSWER:
I’ll respectfully disagree because it’s not necessarily a bad loan at all. Here’s why:

Your standard 30-year fixed-rate loan pays down a microscopic amount of principal the first few years. And since the average “life” of a home loan is just under 3 years, most loans are almost at their original balance when they’re paid off anyway. And most (all?) interest-only loans give you the option to pay down principal whenever you want. So you could pay off as much or as little principal as you want to each month.

Are interest-only loans for everyone?

Perhaps not if you intend to stay in your home for a long period or you need the discipline of HAVING to pay principal every month, rather than it being an option.