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
An interest only mortgage have lower monthly payments, as you only pay the interest and no downpayment. In those 20 years you would have saved as much as the entire mortgage in cheaper monthly payments. You can invest these savings and on average end up with more money then if you made downpayments on your mortgage. The issue is that you are taking a bit of a risk. If the stock market drops at the wrong time you may lose your home.
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