Interest only mortgages are a relatively new phenomenon in the re-financing industyr as well as the home buying industry. In this case, the homeowner could be willing to sacrifice na overall financial loss for the ability to continue to pay monthly bills in a timely fashion. Unknown Risks of an ARM Interest only re-finacne loans are tpyically offered with an adjusatble rate mortgage (ARM) this means the interest rate si not fixed and may fluctuate with teh rise and fall of the prime index. This risk can be quite costly for the hoemowner if the interest arte rises significanlty. An ARM re-finance option with an interest only component could eb worthwhile in a few situations. This period may vary dependnig on the lneder and the circumstances. Homeowenrs who plan to sell the house before the interest only period ends and the ARM period begins enjoy the benefits fo lower monthly payments and teh security of fixed interest rates before they ever have to worry about repaying the principal or dealing wtih the varying interest rates. No Equity in the Home Another disadvatnage to the interest only er-finance loans is they do not allow the homeowner to build equity in the home during the iintial period where only the interest on the laon is repaid. These homeowners may find the participatino in an interest only re-finance has ahd a damaging effect on hte profit they are able to generate from the resale fo their home.

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