Interest-only mortgages: Buy now - Pay BIG TIME Later!

We have all heard all the advertising and press about interest-only mortgages. All we hear though is the wonderful benefit it is to have a low, low mortgage payment.

But, before you decide to run out and take advantage of these buy-now-pay-later ... and that is pay 'big-time' later mortgage programs, take a moment to enlighten yourself more about these so-called wonderful mortgages. Think about the basic premise: if you pay only the interest due each month, will you ever start paying on the principal and earning equity in your property?

By definition, a mortgage is a temporary, conditional pledge of a property to a creditor as security for performance of an obligation or repayment of a debt. Simplified, that means you borrow money from a financial institution and they essentially buy your house for you and you pay it all back in the future. How can this happen if you are paying interest only? More accurately, interest-only mortgages are a temporary reprieve from paying off a traditional mortgage. You are actually prolonging the inevitable and eventually you will be paying it even more costly to pay off your mortgage. "But wait, there is more..."