Interest only deal

[Dave Halevi]

Hello everyone, thank you for all Your help here!

I have a seller financing deal with the following terms:

pp 100K, Down 20K, 5Y balloon, 5.99%, Amor 30Y.

1. The seller wants an interest only payments for the next 5 years. Is there any reason for the seller to do that? he's getting the principal anyway at the end, so why not agreeing on payments of P+I on this loan. 

2. At my end, is there any reason to pay interest only except for the sake of paying smaller amount?

3. I'm about to pay 5y of interest only, on 80K, amortized for 30Y. how do we determine what would be the fixed interest rate here, In a case of interest only payments? in all the mortgage calculators I get the amortization and the principal and interest are changing every month.

Thank you again!