Interest only payments

Borrowers can make interest only payments for a defined period of time. At the end of that time, the money borrowed then will turn into fully amortized financing on which the borrower will have to pay on both the loan's interest and principle. There seems to be several benefits to taking a home loan with interest only. First, the borrower can have greater purchasing power and will qualify for a bigger home. Second, the borrower can have increased monthly cash flow because less of their income it tied into a mortgage payment. Finally, this type of financing allows unlimited cash out with certain lenders and eligibility requirements.