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URL:  https://boards.fool.com/welcome-exupser-glad-you-could-join-us-the-20297609.aspx

Subject:  Re: real estate Date:  2/9/2004  9:06 PM
Author:  pauleckler Number:  39070 of 102711

Welcome, exupser. Glad you could join us.

The interest only loan gives you great flexibility to pay off your loan faster or slower depending on your financial circumstances at the time. That can be nice especially if your income varies from month to month say due to sales commissions or irregular investment income.

The disadvantage is that if you fail to pay off the loan within the specified period, then the loan usually becomes due as a balloon payment (unless your loan specifies how it will be continued). Usually that forces you to go out and borrow the remaining funds somewhere else at the then current interest rate. And that rate is likely to be higher.

You need to clearly understand what happens to interest rates on your loan. Interest rates now are at or near all time low rates. Your lender might like to have the ability to adjust the rate (higher) from time to time. Is yours clearly a fixed rate loan?

If your rate is fixed and you pay it off within the 10 yrs specified it should be a good deal.
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