[Hog's Gone Fishin]

WOW, I feel like a fool! I thought I knew it all about mortgages and financing property but I was just awakened after talking with my banker. Let this be a lesson for everybody.

So, since I'm stuck in the house with too much time on my hands and go into my mortgage accounts to review payment historys.

I have 3 mortgages with 30 year/5 yr arms. When I originally took these out I planned to make extra principal payments to get them to 15 year loans which is what I did for the first 5 years on each account. All my other mortgages I've always done 15 yr/5 yr arms.

So in reviewing a property I bought in 2013 I noticed the principal portion of my payment dropped from $379 down to $119 the following month at the 5 yr mark. So then I look at a property I bought in 2009 and same thing when it adjusted in 2014 and same thing when it adjusted in 2019. And sfter the first 5 year marks I had quit making additional principal payments because I had paid enough EXTRA to knock out 15 years.

So I just called my banker and questioned what was going on and he explains to me that when it adjusts the bank system says this is a 30 yr note so it adjusts it back to the balance of years (which basically just reduces your principal each month.

So the bottom line is a 30 year loan is a 30 year loan unless you have the ability to pay it in full at some point. I've never seen this discussed or explained , EVER . And I've read tons of books and info.


This really makes me upset because I thought I knew it all.

So , In hindsight the problem lies in having a 5yr ARM instead of a fixed loan for the whole term it appears.