Pretty well said Rustico. The point here is that the IO is not for everyone. However there are many people out there who are sophisticated enough to take advantage of the IO. Most everyone I know who has used an IO actually can afford to make the payments on a standard fixed rate fully amortized loan.
My bottom line is this; If you cannot afford the home, don’t buy the home. If you cannot afford it now, if you won’t be able to afford it in 10 years then don’t buy it. If you are going to move in 5 years for sure, REGARDLESS of the housing market, then it makes sense to pay as little principal as possible. Common sense dictates a clear exit strategy regardless. Again, if all of you have neighbors and friends that have lived in their homes well beyond 10 years then that is great. My feelings are still that a higher percentage of sold homes are owned less then 10 years then over 10 years. I do not have any statistical data to back that up but I will take a sample of a zip code and look.
