Interest Only Mortgage
With an interest-only mortgage loan, your monthly payment is equal to the amount of interest that accrues on the loan for a given month. This is actually a feature that can be added to many loan products such as Hybrid ARM’s or fixed rate loans and is not a loan product by itself.
PRO: Lower payments. This feature is ideal for someone who has a lower base salary with an annual bonus, expects to earn more in a few years or plans on renovating their home with the money they save on a monthly basis.
CON: Long-term costs. Eventually, payment for the principal is due. The amount you owe will be higher than if you had paid on the principal all along.