Slow Markets and Interest Only Loans

We are currently in a slow market, which raises a question about interest only loans. Simply put, they are not a good match. A zero interest loan should be taken out when you think the property will appreciate significantly in the next few years. You can then refinance it or sell to reap the gain. In a slow market, homes are generally not appreciating much. They can even be dropping in value. Such a scenario is not ripe for an interest only loan. You can get to the end of your initial term and find you have no equity in the home!

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