I stand corrected. I show one lender who doesn't offer it, but another only charges .5 adjustment on 3,5 & 7 year adjustment.
Babs, this means that you'll pay a slightly higher fee for intersest only compared to a fully amortized loan but it would lower your payment nicely compared to fully amortized.
Babs, you have to take everything into account. None of us know what your life is like, what is going on with your income, and whether you will be in a better place 5 or 6 years from now, so that you will be able to move.
I'm not a big fan of interest-only loans, but if you're in "survival mode", perhaps it makes sense. Without knowing more about your situation, it's hard to comment on this.
Did you purchase during the real estate "boom", and now need to work out a loan modification with your lender? If that's the case, you may want to look into NACA. This is a grass-roots consumer advocacy group that helps homeowners work with their banks to restructure their mortgage. The following article explains more about the group:
If it sounds like something you might want to investigate further, you can check out their website, referenced below. Good luck.
Maggie Hawk, REALTOR
Watson Realty Corp.
A 5/1 ARM is a good product when you know you are going to be moving in under 6 years. I say 6 because even if it adjusts to the maximum you may be money ahead for the first year after it adjusts. Whether interest only makes sense really depends. Most of my lenders have priced this option out of consideration.
Discuss your goals with your lender and look at both scenarios if they are available. You can also consider a 7/1 ARM if you want some additional cushion.