We found a 30-yr APR loan w/ interest-only w/ a fixed rate of 4% for first 5 yrs
This sounds appealling to us because that way for a $400k loan, the monthly payment for the 1st 5 yrs would be ~$1,350 +tax+insurance=~$2,000 VS when we tried to get a 30-yr fixed traditional for ~$310k the payments were ~$2,200 [incl tax+ins].
W/ this IO loan, we can afford more house for the same monthly payment, and that's good because less than $350k in San Diego doesn't get you much of a house.
So, my question is, if we stick w/ the fixed IO loan AND assuming the house gains some equity in those initial 5 yrs; when we refinance or sell the house, what happens to that equity? Does the bank keep it because we haven't really been paying the capital just interest? Or do we get it? Can we use that to lower the payments when/if we refinance?
Our main goal is 2keep monthly paments as low and as fixed as poss, even if in long run we pay more. We dont plan 2 b ther 4 mor than 5 yrs, n if we do we'd refin