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Two questions for Dave if you're out there

Posted by CindyBelleZ6NJ (My Page) on
Thu, Feb 19, 04 at 9:48

Dave, first let me thank you for all the info. you post,it's been very enlightening. A friend of mine asked me this question, I have no idea-if he switches to an interest only mortgage, can he prepay principal? His thought is his conventional fixed rate mortgage is at 6%; he can get an interest only at 4%-he wants to make the same payment every month as he is making now on the conventional 6% mortgage, allocating the "extra" to an extra principal payment-does it work that way? Also, does it make sense when one's mortgage gets below $100,000 to take a home equity line to pay off the mortgage if there are no prepayment penalities? Thank you.


Follow-Up Postings:

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RE: Two questions for Dave if you're out there

Hi Cindy,

Dave, first let me thank you for all the info. you post,it's been very enlightening.

My pleasure!

A friend of mine asked me this question, I have no idea-if he switches to an interest only mortgage, can he prepay principal?

Absolutely!

His thought is his conventional fixed rate mortgage is at 6%; he can get an interest only at 4%-he wants to make the same payment every month as he is making now on the conventional 6% mortgage, allocating the "extra" to an extra principal payment-does it work that way?

Sure! He'll be accelerating his payoff that way.

Also, does it make sense when one's mortgage gets below $100,000 to take a home equity line to pay off the mortgage if there are no prepayment penalities? Thank you.

It may, depending on the desired results and your future visions & expectations of the interest rate markets.

All the best!
Dave Donhoff
Just some mortgage guy ;~)


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RE: Two questions for Dave if you're out there

Thank you Dave! As always, a pleasure to read your posts.


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