Jim,
I think this is GREAT!!!! And one of the reasons the principle balance goes beyond what you originally paid for the property could be those darn interest only payments............that principle doesn't budge a bit with them........but when they capitalize the arrearage into the principle balance it would get added to the original balance which has remained exactly the same over the life of the loan so far.........therefore raising it.......
Does that make sense?
Payment would be a bit higher due to escrows.........but.......now the principle will start to be paid down and the taxes and insurance will be paid........so if it looks good and it was what you were told.........then sign away.......