what if i paid my 5/1 ARM mortgage before the first 5 years?

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I want to buy a house and i am confident that i can pay it the full amount in less than 5 years. Ex, the house costs $ 100k and i make monthly payments. My question is that if i paid those 100k before 5 yrs what happens with the 5/1 ARM? Will the bank still be changing me though there wont be principal balance in the loan.

2 Comments
  1. Reply
    ironbutt
    May 1, 2011 at 3:03 am

    if you paid the $ 100k plus the current interest due, the loan would be paid off,,,,,,no balance due after 5 yrs. if there is no principal, the loan is done
    If not the interest rate would reset to the prevailing market……..the reason we are in a housing crunch….interest rates went way up when they reset and now lots o people cant pay the mortgage….esp on a house that’s worth half of what they paid for it a couple yrs ago

  2. Reply
    SUSIEQ
    May 1, 2011 at 3:19 am

    Youhave to check the paperwork… you may have a prepayment penalty… so it will depend on how they structure that and how you pay it back exactly. make sure to look over paperwork totally before purchases this will be an important part of your financial shopping.

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