Interest only loans

When shopping for FHA loans I came across one of their articles advertising interest only loans. The way they made it out to be was that if a first time home buyer doesn’t have much for down payment, they can avail an interest only loan option where the payments would be lower the first year or so but after that they would have to pay the principal + interest.

My question is, why would an interest only loan even be considered. In my opinion an I-O loan is a terrible option. I would always want to pay down the principal so that I can pay off the loan quicker and therefore pay less interest.

Is there some advantage of I-O loans that I’m not understanding?

submitted by /u/thentangler
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When shopping for FHA loans I came across one of their articles advertising interest only loans. The way they made it out to be was that if a first time home buyer doesn’t have much for down payment, they can avail an interest only loan option where the payments would be lower the first year or so but after that they would have to pay the principal + interest. My question is, why would an interest only loan even be considered. In my opinion an I-O loan is a terrible option. I would always want to pay down the principal so that I can pay off the loan quicker and therefore pay less interest. Is there some advantage of I-O loans that I’m not understanding? submitted by /u/thentangler [link] [comments]

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