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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 126984  
Subject: Re: Fixed HELOC principal/interest varies?? Date: 11/19/2012 10:18 PM
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My guess is that they calculate the interest daily rather than monthly. Each payment pays the interest due from the date of the last payment to the date of the current payment, with the balance of each payment going to principal.

So if your actual payment date varies a little bit each month, different amounts will be going to interest and principal. This is different from the typical 1st mortgage, where the payment is considered to be made on the 1st of the month no matter when it it actually paid. (It's more like the way interest is calculated on your credit cards.)

Auto loans also often amortize this way.

--Peter
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