General questions about interest only loans
A couple of years ago, my in-laws obtained a HELOC for $150K to remodel their house. My MIL told me recently it's an interest-only loan with an APR of only 2.5%. Thankfully, she's been making principle payments on top of that. However, the way she speaks of it makes me think she may not know of other potential pitfalls to these kinds of loans. Doesn't the APR increase dramatically after a few years, to include some sort of balloon payment? I don't want them to have a big unpleasant surprise in the near future. Thanks!