No. of Recommendations: 5
A rather fascinating series of comments, but one I haven't seen mentioned bears mentioning:

Assuming you have the interest only loan for 5 years, and the expected bursting of the proverbial real-estate bubble occurs, what happens when your home at the end of the five-year period is worth LESS than the principal amount of your loan? What bank will loan you 110%, 120% (or possibly more) of the value of your home? And if by some strange reason (i.e, they don't want it back... LOL) they DO decide to make the loan, what type of over-market rate will you be charged?

Not to mention that, knowing from my own experience that what doesn't go to the loan goes to discretionary spending (i.e., Starbucks and other waste...), how realistic is it that you'll actually put the difference into investments - and INCREASE that difference every month? (Remember, with a traditionally amortizing mortgage, the principal paydown increases each month - albeit quite slowly.....)

Just a few thoughts....

Print the post  


UGC Disclosure Notice Regarding Credit Card Posts
Community board discussions about credit cards are not provided or commissioned by banks who may have advertising relationships with The Motley Fool. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.