Benefits of Interest-Only Mortgages

First, Interest-Only Mortgages have deductible tax, the greatest feature of all 30-year loan is its tax savings, but for some people it can be a huge disadvantages. Of course, nobody like paying tax. With tax savings we can have our tax deducted. It means if you have $5000 mortgage interest each year you have a 30% tax bracket, then the government will forgive $1500 (30%) of the mortgage bill. Then you are only required to pay $3500. In a conventional loan, the tax savings will go down because of tax amortization when you near the end of the loan. The interest part of the monthly payment goes down and the principal part will go up. In other words the tax savings decreases each year when you have a 30-year amortized
With interest-only mortgages the payment will go down each month as it is amortized gradually. For example, if with 30-year loan has $1500 a month and you only pay $1200, it equals with $300 cash flow difference. In current economic situation, money is king! If you can reduce your payment $300, it would mean really a lot as it means you 'earn' $3600 annually. Everyone surely loves such a huge amount of cash as it can be used to pay the principal which may make the mortgage payment faster.
You can also use the extra cash in a safe vehicle where you can earn interest from saving account. In ten years, you can have nearly $40,000 which is a significant amount of money and would be useful as an emergency cash fund. The cash wouldn't be locked in your property and it is safe, accessible and makes free money for each month. With interest-only mortgage you can earn money while paying off your house.