Posted on: 12th Oct, 2008 09:18 am
My wife and I bought a house 4 years ago. We got an interest only loan. In talking to loan brokers, no one sems to understand my loan... It doesn't even show up as a first mortgage...I guess this is a result of the creative mortgages that got this country into a mess...
In any case, my mortgage is essentially a HELOC (and for whatever reason we don't pay PMI). As such it appears on my credit report as revolving credit, like a credit card. Since it is interest only, it appears that I have a constant balance that never gets paid down - not good.
Our rate equals prime minus a quarter point. So it can vary quite a bit. Over the past 4 years, we have just paid interest. Now with prime really low, we have extra cash flow and are trying to figure out how much to put towards principal. In other words, we are trying to figure out an ammortization schedule for a mortgage whose rate can change monthly...
ALso, do you thikn we should even put the extra cash towards principal? Would it be better to put that cash in an interest bearing account and put it towards principal when we are ready to sell?
Just looking for advice...
thanks,
brian
In any case, my mortgage is essentially a HELOC (and for whatever reason we don't pay PMI). As such it appears on my credit report as revolving credit, like a credit card. Since it is interest only, it appears that I have a constant balance that never gets paid down - not good.
Our rate equals prime minus a quarter point. So it can vary quite a bit. Over the past 4 years, we have just paid interest. Now with prime really low, we have extra cash flow and are trying to figure out how much to put towards principal. In other words, we are trying to figure out an ammortization schedule for a mortgage whose rate can change monthly...
ALso, do you thikn we should even put the extra cash towards principal? Would it be better to put that cash in an interest bearing account and put it towards principal when we are ready to sell?
Just looking for advice...
thanks,
brian
Hi bluether!
Welcome to Forums!
You can use the following link to get an amortization schedule.
http://www.mortgagefit.com/calculators/arm.html
As far as your second question is concerned, is there a pre-payment penalty attached with the mortgage that you have taken? If no, then you can start putting extra cash towards the principal. This will help you to clear off the loan and you will also be able to sell off the house easily. If there is a pre-payment penalty attached with the mortgage, then check the time span of that penalty and once you have completed that time limit, you can start putting extra cash towards the principal.
Feel free to ask if you have further queries.
Sussane
Welcome to Forums!
You can use the following link to get an amortization schedule.
http://www.mortgagefit.com/calculators/arm.html
As far as your second question is concerned, is there a pre-payment penalty attached with the mortgage that you have taken? If no, then you can start putting extra cash towards the principal. This will help you to clear off the loan and you will also be able to sell off the house easily. If there is a pre-payment penalty attached with the mortgage, then check the time span of that penalty and once you have completed that time limit, you can start putting extra cash towards the principal.
Feel free to ask if you have further queries.
Sussane
Hi bhuether,
Even if it's an interest-only loan, you can always make payments towards the principal. The interest-only option allows for such payments. Only thing is that, you need to inform the lender prior to staring the principal payments.
I don't think paying the principal right before you sell property will be a good idea. I mean there's always an interest-only period - a certain period of time after which you'd have to pay towards the principal. Just check out your loan doc to find it out.
Good luck
Even if it's an interest-only loan, you can always make payments towards the principal. The interest-only option allows for such payments. Only thing is that, you need to inform the lender prior to staring the principal payments.
I don't think paying the principal right before you sell property will be a good idea. I mean there's always an interest-only period - a certain period of time after which you'd have to pay towards the principal. Just check out your loan doc to find it out.
Good luck
I confirmed there is no prepayment penalty. They gave me an address to send the principal portion checks. Hopefully home values will go up and we'll be able to sell in a few years...
thanks,
brian
thanks,
brian
Hi Brian!
Welcome back to forums!
As you have no pre-payment penalty, then you can easily pay off the debts. If the market in your area is good, then you can even sell the property at a higher price. All the best.
Feel free to ask if you have further queries.
Sussane
Welcome back to forums!
As you have no pre-payment penalty, then you can easily pay off the debts. If the market in your area is good, then you can even sell the property at a higher price. All the best.
Feel free to ask if you have further queries.
Sussane