Posted by River City on January 12, 2007 at 13:14:07:
If you do decide to refinance to an interest-only loan, it is better if you make payments on the principal even during the interest-only period. There are a couple reasons for this, one being that you are building more equity in the property if you make payments to the principal. This take discipline since the extra money is not required. Another reason to do this is so that you do not have payment shock once the interest-only period is over and the REAL payment kicks in.
If you are a person that has difficulty putting money into a savings (of any sort) account and keeping it there, I certainly would not recommend the interest- only loan.