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I've a few questions on what options I might have if any.
I recently purchased a new build and took an 80/20 interest only 3 year
ARM. Having previously always bought via VA, I did not fully consider the
ramifications of the 20 portion being a 'personal line of credit' in terms
of the 'revolving credit' aspect of the deal.
I made an addtional payment of $1000 on the 20% portion of the loan on the
first payment and it was a real eye opener to see that the 'principal' was
not reduced by $1000 as it had the finance charge added like a credit
card.The 20% portion is also subject to prime rate fluctuations.
I had previously talked to the bank about making addtional payments on
principal only and got a story about how I had a 3-5 day period around the
posting date when I could do that. I'll see them again for a
clarification but I got the impression that if I made additional payments
outside that window, I'd not get 'full credit' for those payments.
Current balance on the 20 is 67885 on a 6.25 APR.There are 31 days in the
billing cycle.
My questions are:
1) Is there any payment frequency/amount option(s) which would minimize the
finance charge?
2) Any other options that would reduce or eliminate the revolving credit
aspect of this, i.e re-financing the 20% portion only or whatever?
Thanks in advance.
Gerry
datapro01@yahoo.com
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Question on an 80/20 3 Year ARM
