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Originally Posted by scaeagles
I look at interest only mortgages a bit differently. I do not have an interest only, but not a lot of what I pay monthly goes to principle.
If you live in a market with appreciating real estate values, it makes much more sense to have an interest only mortgage than to rent. Your real estate investment continues to grow regardless of whether you are paying down the principle, and you have massive tax benefits.
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A big problem (at least here) is the people who took out interest only loans they could barely afford. Now the interest rates are going up and people are behind on their mortgages. Yes, it was their fault for buying a home they could barely afford but the untraditional methods banks are using to get people into homes are messing with the economey as well.