Is an ‘interest-only’ mortgage a wise choice?

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

DEAR BOB: What is an "interest only" mortgage? We have a 4.875 percent adjustable-rate home loan, but another bank offers 4.25 percent "interest-only." Is this a good or bad deal? – Vincent P. DEAR VINCENT: Interest-only home mortgages have become extremely popular with home buyers and homeowners seeking to minimize their payments by refinancing. Purchase Bob Bruss reports online. An interest-only home loan is usually an adjustable-rate mortgage (ARM) with the monthly payment locked-in for a specified term, such as 12 months. After that, the payment adjusts, depending on its index plus a margin (like all ARMs). There are pros and cons. If you expect to stay in your home less than five years, an interest-only mortgage keeps your monthly payments at fully tax-deductible rock-bottom. You won't be paying down the principal balance but, if you will be selling in five years, who cares? However, many interest-only mortgages have "negative amortization" or "negative am." That ...