It’s no longer just about the rate. It’s about how many dollars of interest you pay on a lower principal balance. With this loan, your principal balance is continually forced down by your direct deposits, and this can offset the effect of higher rates because you’re paying interest on a lower balance. This effect actually compounds as time goes on. The best way to observe this is to contact Jill Korenaga for a 10 minute walk through using the interactive Simulator. You’ll see why the slightly higher margin on this loan, which is required due to its highly transactional nature, can have such a minimal effect on the overall payoff timing.
You're welcome to contact me anytime. Email or call me today. You've got nothing to lose except years off your mortgage!
You need to be disciplined. But, if you have a good credit history, you get credit card offers each week, and can easily open a home equity line of credit to access your home’s available equity. Any of these offer you the same ability to get into financial trouble. We don’t expect our customers to change their good financial habits just because they take out the HOA.
The loan is ideal for people whose income might vary. During the first 10 years, you only owe interest, which is automatically added to your principal balance monthly, so there’s really no “payment” to make as long as your principal balance stays below your credit line amount. The only payment you need to make is to stay below your credit line amount.