[quote=fat_lazy_union_worker][quote=meadandale]I do know that a friend of mine who bought a house in 4$ last fall for $700k bought it using an interest only ARM. And at one time I thought he was a smart guy…[/quote]
The guy is a genius, because he will probably get to to have his loan modified, unlike if he actually put down 20% and did a 30year fixed :([/quote]
Actually, getting an interest-only loan is the smartest thing a buyer can do. He gets the mortgage deduction, he may end up paying less than comparable rent, and he can walk away when he’s ready unless the value of the house goes up — in that case he can sell and keep the cash.
Interest-only buyers get all of the upside with none of the downsides.
