Interest Only Mortgages - The Way to go???

The popularity of fixed-rate interest-only mortgages is skyrocketing.These loans, in which the borrower pays nothing toward the principal and can feel confident the payment will remain level, typically for the first 10 or 15 years, were virtually unknown two years ago. They now account for 8 percent of all new residential mortgages, according to UBS AG, a financial services firm.U.S. Bancorp, Quicken Loans Inc., GMAC Mortgage, and Bank of America Corp. are among the lenders offering the product. The downside for buyers is that they build no equity in the property beyond its increasing value. And the monthly payment will rise precipitously once a borrower begins repaying principal.
Source: The Wall Street Journal, Ruth Simon (04/19/2006)
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