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In Reply to: Primerica - simple interest mortgage confusion posted by Sue on November 03, 2002 at 13:43:04: They do compute their interest on an average daily balance. This is so that "early" payments get applied early instead of on the first of the following month. This has an effect, thoughbeit a very very small one, on your payoff schedule. Mainly, they're trying to set you up on their bi-weekly payment system. They usually will tell you that the system is MUCH more "powerful" this way. In reality, the simple interest only plays a small part in the overall equation. It is definitely *NOT* worth the 1+% in interest rate they will try to get you to take. The "simple interest" facet, by itself, is only equivalent to a small fraction of 1% when all is said and done. Any benefit not immediately wiped out by the higher rate will be wiped out by your prepayment penalty and the high, high closing costs. Be careful!!!
: Am I wrong here???? The agent is unable to actually tell me what in the world is so different about her loan, since she has no background in finance, nor has the agent ever attended a college course. Obviously I would never give her any control over my finances, but I am unable to even figure out what she's trying to sell me. I have a standard 30-yr fixed rate mortgage. Isn't it a simple interest loan?
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