I always felt like an “Interest Only” loan (where you pay no principal and are only making the interest payments on the loan) was like taking your house and putting it on a credit card. I was never a big fan of these loans, and as a result never did many because clients always sensed my unease, and ended up going to the competition who talked these loans up as a great way to “get in the market.”

I thought the Interest Only loan has been put to bed, and no one was doing them anymore. I did not think any client wanted them, nor did I think many banks offered them. But, I was surprised when an old client of mine said he was approached by a lender to refinance from his fixed rate mortgage to an Interest Only loan. Huh? Read the rest of this entry »