MSN Money recently ran an article stating that interest only loans are bad choices for most borrowers. The headline ran as "Interest-only loans: not magic, usually not smart".
Then, the next line:
The last interest-only mortgage craze ended with a wave of foreclosures in the Great Depression. Today's interest-only ARMs are even riskier. Here's what to ask before you take that risk.
The author does a good job disclosing some of the risks inherent to interest only mortgages, but he avoids putting mortgages in the full context of a complete financial plan. As a result, the article is filled with fear-mongering instead of an actual education.
For example, the author warns of:
To address these issues, one-by-one:
It's only at the end of the article that the author briefly highlights the positives of interest only home loans and he nails it on the head.
In short, it comes down to discipline -- just like with any other mortgage product.
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