Interest only loans have been demonized in the media, but they are excellent loan products. I have a 30 year fixed loan with a 10 year interest-only option on one of my OWN properties, and I'm a mortgage loan officer!
Most people don't understand that the interest-only payment is OPTIONAL. If you want to pay your loan balance down, you can just add more to the monthly check you send to your lender on months when you have additional income. You can pay your interest-only loan off in 30 years, 20 years, 15 years...just by adding a little more to your payment each month. But with the interest only option, you also always have the option of having to make only the interest payment during months when money is tighter.
However with that said, if the interest rate on a loan that has the interest-only option is higher than the loan with the straight fully amortized payment, you may want to take the fully amortized loan. You may not want to pay a higher rate just to get the interest-only option. But if the rate is equal, why not take the interest-only only option?
Sr. Loan Officer