You are correct about paying on the principal on an interest-only loan. If you choose an interest-only loan, you can still make payments towards the principal. When you make payments on the principal, your interest is re-calculated based on the lower principal amount.
I hope this helps!
Real Estate Broker & Lawyer
You apparently want a 30 year fixed mortgage loan. That's good. If that payment is affordable for you, use that vehicle. If you want a lower payement, the 10 year interest only could be a good choice. You can still make voluntary principal payments during the interest only period. However, different lenders have other policies on whether that decreases the loan time or whether interest is recalculated each month or year.
Tim Sibley at First Capital Mortgage has done a great job for our friends and clients here at The OC. Please contact Tim at 949-71815111.
Thanks and best wishes. Harrison K. Long, Explore Group properties, Coldwell Banker Previews.
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Yes, you will be able to make principal payments at any time with no consequences, as long as there is no prepayment penalty. If your loan does have a prepayment penalty, then you may need to find out what that term is. Most lenders with prepayment penalty terms will not allow you to pay off more than 40% of your loan balance before your prepayment penalty period ends.
The BEST advice I can give you is to talk to an experienced DIRECT-FHA lender who can give you the time and attention that you need. He will be able to take all of your individual factors into consideration and provide you with the information you need. This way, you can get the most accurate and beneficial information possible.
I refer all of my clients to him and they have all been extremely satisfied with him.
American Guardian Home Loans
T: (949) 242-5215
T: (877) 242-5215
Should there be anything else that I would be able to further assist you with, please feel free to contact me directly.
Whether the lender allows you to make principal payments during life of the loan, and whether it would then recalculate interest owed, would be up to the lender and terms of the note.
I recommend you contact Tim Sibley, First Capital Mortgage, 949-718-1511. Best wishes.
Harrison K. Long, Explore Group Properties, Coldwell Banker Previews.
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