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
They’re definitely a niche product… but here are a few scenarios.
– You’re a flipper who will be buying the home to remodel and sell, and want to keep carrying costs to a minimum. You plan to own for 6 months or a year and all your gains will be due to the work you put into the house, not paying down the mortgage.
– You’re buying a starter home/condo and think prices will keep going up, but that you don’t plan to stick around very long. Since most of the early year mortgage payments are going to interest anyhow, you go interest only, invest the difference and just hope to profit from value appreciation when you sell in a couple years.
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