From: "Lon" 
Newsgroups: misc.invest.financial-plan
Subject: Re: Mortgage - fixed versus interest only
Date: Tue, 10 Apr 2007 16:11:37 -0500
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On Apr 11, 7:24 am, "Slain"  wrote:
> I just refinanced my home to a interest only for 5 years. Because of
> the low real estate value these days, my house appraisal was almost a
> 100,000 less than what I expected.
>
> As a result, I am wondering if I should just get back to a fixed 30
> year term.
> Here are the numbers
>
> My princpal amount is about 203,000.
> I got a 5 year term interest rate of 6.125% - $1050.00 a month.
> I can get a fixed rate mortgage of 6.375% - 1350/ month
>
> My logic: If housing prices are going to stay low for awhile, I can
> keep the house with a fixed cost. So even if I were to eventually
> maintain the house as a rental property and wait until house values
> increase, I will not be forced to sell because the cost is still
> manageable.
>
> At some point I do plan to sell the house and move on.
>
> Sugestions welcome.
> Thanks

Go with a fixed rate. The interest only is like wetting the bed, at
some point you will have to get up and change the sheets.