Buy the house of your dreams with an "interest-only mortgage!" You'll get a low mortgage payment, and you'll maximize your tax deduction, all on your current income! Sounds good, right? Sure, but there's considerably more you need to know before you get an interest-only mortgage. For starters, the name is misleading. There is no such thing as an interest-only mortgage, because eventually you'll have to pay the loan principal as well. What you're really getting is an interest- only payment scheme which can be combined with any type of traditional mortgage.
The other thing you'll want to keep in mind is that the benefits are way overblown. In the early years of a standard mortgage, the interest takes up about 95 cents of each dollar paid to the lender. The standard payment on a 6%, $100,000 loan is about $600; of that, $500 is interest, "saving" you just $100 per month. Moreover, not paying any principal now means that you'll pay more interest later.
