Posted by John on September 17, 2004 at 05:25:35:
As you indicated at the top, you split the profits after both sides takes
out any equity they respectively paid in. Hence you pay in and then you
get it back before the split. If you do not pay in then you do not get
any back before the split.
Yes, it might be technically better to pay interest only and use the cash
somewhere else. Based on the loan options you might find that paying
interest only would not provide you with the best loan given your
In the early years of a 30 year mortgage very little equity is actually
paid in. Close to 100% of the payment is interest anyway.
PS. Do not sweat the small stuff. More importantly is what happens if
someone wants out early, dies, or otherwise the deal does not work out
well in the short term.