I can see an interest only loan if the property value is expected to rise, but I would rather gamble my money elsewhere.
Exactly! And expecting values to rise much right now might be a big mistake. I just talked to a friend that is in home construction in the Seattle area. He is VERY upbeat but when you really drill him he admits that things have "flattened".
I think of this flattening as what happens to the trajectory of a model rocket when it's fuel has expired and it reaches the peak. It seems to just sort of hover there for the briefest of moments and then...