Why would you ever get an interest only mortgage?

Question

From what I understand about mortgages, which isn’t a lot at all, I just don’t see any scenario where an interest only mortgage is a good idea.

You pay it off for let’s say 20 years and you still have the full balance remaining. What am I missing?

In: Economics

Answer 1

To add to others, these were more popular when rates were lower and it allowed people to get into homes they otherwise would not have been able to afford with a conventional mortgage from both a down payment and monthly payment perspective. Many interest only loans didn’t require 20% down.