Considering that on average, most homeowners either refi or sell their property every 5 years, the amount of principal paid down is minimal on a mortgage compared to going interest-only. Also, the borrower can indeed pay extra principal if they want to, subject to the lenders' guidelines. As long as the borrower is not going neg-am, and assuming that the property appreciates somewhat during the time of the loan, an interest-only mortgage is not a bad idea.

There is an entire industry out there that preaches separating your equity from your home and investing it in a tax-deferred program, while using an interest-only mortgage to cover the cost. It can create tremendous wealth. Remember, the equity in your home has a ZERO percent rate of return, and can only be accessed affordably if you don't need it. I suggest that you go to http://LoanOfficer101.net/fp and click on the audio button to listen to a couple of financial planners explain this concept much better than I can.

- Joe