I am planning to refinance my primary residence. I am intrigued by an interest only mortgage like the ING Orange mortgage because of the low interest rate. But I know if all I ever pay is interest then at the end of the term I'll owe a bunch. But I am a very disciplined person. So my thoughts were to take out the interest only mortgage but pay enough extra each month to be paid off at the end of the term. Then I would be taking advantage of the lower interest rate which right now is about 2% lower. That is a significant interest savings over the life of the loan. Is this a bad idea? Am I missing something?
EDIT: I also need to confirm with ING that I am allowed to pay extra towards principal without any penalties. Yes you can pay extra principal without penalty.
EDIT2: Let me try and answer some of the questions being posed to me. I plan to stay in this house for the foreseeable future. Obviously one never knows about job, economy, etc. But I plan to stay for 10-15 years min. So my main goal is to pay the house off as soon as possible. This would be over and above our retirement savings. Still plan 15% of income for that. After reading some more on ING's site it seems this is not an interest only loan but not a typical arm either. It is a loan for 5 years with the principal and interest payments structured as if it is a 30 year loan. After 5 years I have the ability to refinance with ING for no closing costs at their current rate. So the main risks I see is if I don't get it paid off in 5 years (unlikely I will be able to that fast) I'll need to refinance with them or someone else at the current rate 5 years from now.