For those not familiar with interest-only (I/O) loans, basically you're only paying the interest on the loan, not paying back part of the principal (as you would with just about any loan.)
How, you ask, is this possible?
The answer is that it's not. There is always a reset clause (say 3 years) when you have to pay back the principal in full. Needless to say, most people will not be able to so they will need to refinance into a different loan.
I/O loans make sense in very specific contexts (say you need financing because you plan to get a large payment a year from now, etc.) It makes ZERO sense for the "average" person. Basically, you're just renting from the bank except that you're on the hook if the value of the asset actually falls.
Do you see the fucking problem?
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