We own a number of properties and use the interest only loan option on investments only, and, only if the rent roll covers at least 150% of the payment. If you cannot significantly pay down the principal on that loan then you will end up paying interest on the same money twice.
As for your expected $800/mo. deduction you should understand that you still have to pay the same amount monthly and only realize the benefit of that deduction in the following year at tax time. You should also understand that an $800 deduction will not translate to $800 savings. Other factors, such as your bracket of taxation come into play.
If you are counting on a tenant to meet your payment expect to dig into your own pocket for every month that you do not have one. This will happen more often than you think unless you find the magic tenant and sign a long term lease.
With a tenant you insurance costs will go up as will your maintenance costs.
What will your PMI costs be?
How secure is your employment? Where are you in your career earning power wise?
I am a firm believer as RE as an avenue to wealth which is an avenue to freedom and I applaud your thinking...I just don't think you're really ready to pull the trigger...what kind of condo will $350k buy in SM? maybe there's a place to start.
This is not exactly correct. You can immediately go to your payroll department and change your W-4 withholdings and receive changes to your current payroll withholdings. Depending upon your company, this would become effective within a couple of payroll cycles. You would have less taxes taken out & thus be able put that towards your mortgage. With the deductions, you would owe less taxes next filing date. I assume your tax advisor would have calculated out the $800 amount you are quoting based on last year's income & this years projected earnings, as well as the deductions you will receive for the home ownership.