Need to look at primerica, marketing arm for citi bank. They offer simple intrest loans. The loan is recaculated every time a payment is made, unlike schulded structured loans. If you choose to make bimonthly payments they deduct 1/4%. If you have a b or less credit rating and are on time with your payments they will deduct 1% more. They loan 95% ltv with no pmi. That's huge. Intrest only loans are good for poeple not staying in their home for very long. Hopefully your are not looking at a prepayment penality, find out before you make a move.

I think this article will answer your question

http://getprequalified.com/article/104749/mortgage_loan_prog…

I agree with the others and would add that it is important to make sure you have a good-sized emergency fund in place before paying extra on mortgage so you won't have to rely on credit cards in the event of a financial emergency.

Sal this is a great loan that you selected. It places you in charge of your mortgage. What is great about this mortgage is that by using the Interest only option you can actually pay down on your mortgage faster than a conventional home loan. The loan does not fully amortize until your 10th year. By paying more each month to your principal you can actually lower your payment each month for the first 10 years. The interest only is just like your credit card payments. You only pay interest on your last months balance.

Hi Sal,

I'm always in favor of prepaying on the principal. It doesn't have to be a huge amount - $50, $100 or anything that you can afford. It's amazing how quickly this adds up.

Sal, it is not a bad loan and there is nothing wrong about paying a little extra a month, as long as it makes you feel more secure. Do what you are comfortable with. At the same time you asked question, so let me give you a very different point of view. Paying of your mortgage entirely or paying it off is not necessarily a good idea. The way tax breaks work in our country, you might want to continue paying of your mortgage when you retire. Why, because if you don't do that - you will be moved to higher tax bracket then then you are now. Do you want to pay high taxes then? Probably not. So do your google research on why you want to continue paying mortgage when you retire! Find a compromise between financial benefits and your sense o security. If I was you, I wouldn't pay any extra principal for next year but invest your extra money. Do your research and you find out that paying off too fast works against your best financial interest. Just be patient in your research as this things tend to be very confusing, There is no single right answer. You have to be comfortable with it, but conventional wisdom is not necessarily something to go blindly with.

If at all possible pay the principle portion along with the interest as you balance will inch down. If you happen to be there in 10 years your payment would be less that the $4200. Adding a little extra to the principle is always a good thing if you have the cash.

Sal,
It is always beneficial to pay a little more on your principal when possible. Bridgette is right, don't second guess yourself. You have what you have. It's really not a bad deal! Good luck!

Sal, I would agree with Tony. Pay some towards principal - but as he said, make CERTAIN that it is applied that way. On my mortgage, we pay on line and can address the amount toward principal. there is no down side to getting that principal paid down! You will build your equity that much faster. Your loan program is fine. As Bridgette said, Don't start second guessing yourself and beating yourself up! Keep on moving forward and you will do just fine!

Patti Phillips
800-680-9133

There is nothing wrong with this. You will have the benefit of interest only payments for the first 10 years. The downside; however, is that when the interest only period stops, the principal and interest will be amortized over 20 years thereby causing the significant rise in payment.

The good news here is that most lenders support something called "recasting". This means that if you make additional principal payments on your own, the monthly "interest only" payment will adjust down based upon the new principal balance. Some lenders, like Wells Fargo, do this automatically. Other lenders, like Citibank, require that you let them know you are going to do this and they will only recast if you make a principal payment of $5,000 or great. Consult with your bank to see how it works for you.

If you want to minimize the increase in payment, the key would be to try to reduce your principal balance before the end of the initial 10 year interest only period.

-Aaron Wheeler, President, Oakville Properties & Oakville Capital

Sal, the mortgage you currently have is one of my most commonly used programs. I think it's great you're secured for 30 years, and yes, when you have extra funds, applying it to your principle balance is smart. Keep in mind, when you pay down the pricinple your interest only payment will go down as well. That's the great thing about this type of mortgage, you have the flexibility of paying interest only or you can apply additional funds.

Sal,
For better or worse, you've got what you've got. Don't second guess yourself this late in the game, you'll only get stomach ulcers. Yes, make an additional principal payment each month, as much as you can comfortably afford. Be sure the overpayment is applied solely to your principal (check with your lender to be certain). This will save you quite a substantial amount of money in the long term, and perhaps make a huge difference if you need to resell your house due to unforeseen circumstances in the future. Best of luck and congratulations on your new home!