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"mabdala2006" <brunoaraujo2004@aol.com> wrote in message
news:1165891980.188370.150790@l12g2000cwl.googlegroups.com...
> Thank you Jeff!!!
> I guess I was wasting money!!!
> A friend of mine once told me that the only way this kinda payment
> would work out without being "too heavy for your pocket" would be to
> send the minimum payment plus let's say $300,00 more towards principal.
> That would be less than paying the I/O option and could help in not
> having the negative amortization! But I guess she was wrong and I was a
> foul!
That would be "fool". <wink>
> By the way, do you know if it can be fixed for 3 to 5 years or it's
> just another lie??!!
> Thanks for your time!!!
>
Whether or not the rate can be fixed is dependent upon the specific product,
you have to ask the customer service staff this question. Prepare yourself
for an answer of "No."
You weren't wasting money because you avoided going negative by that amount.
But, paying the I/O payment would have caused you to not go negative at all.
In a NORMAL 30-year fixed loan, the bank takes its interest that is due,
then takes any impounds (for taxes and insurance), then aplies the entirety
of the remaining payment to principle reduction. In a fixed rate loan, you
always know the payment amount that is due, say $2000. This includes the
interest, impounds, and principle. ANY additional funds you supply with your
payment are required to be applied to principle reduction. It is far better
to make an overpayment of mortgage than to make an extra payment, here's
why. If you make an extra payment, they take interest and impounds first,
then they reduce principle. BUT if you made a doulbe payment on the same
check, they take interest and impounds, then apply all of the remaining
amount to principle reduction. When you write the extra check, some of the
funds don't reduce principle, but when you make a doulbe payment on one
check, you get greater reduction of principle.
A Neg Am payment is merely a payment that falls short of paying the interest
that is due. If you add additiional funds to the Neg Am payment, all that
happens is you go negative by a lesser amount.
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Re: 4 payment options
