Interest-only mortgage ahead: Proceed with caution

They’re popular but they aren’t for everyone.

The Federal Deposit Insurance Corp. says Colorado ranks third in the nation for its share of interest-only mortgage loans on the books. Nearly 44 percent of the state’s new purchase loans in the first half of 2005 were interest-only, or double the national average, according to the FDIC.

The interest-only approach is plenty popular locally as well. The Fort Collins metropolitan area was one of four in Colorado ranked in the top 25 in the nation for areas where interest-only loans exceed 40 percent of all purchase loans.

These loans have grown in popularity over the…