I'm pretty risk-averse by nature and I'm trying to figure out what's the best use for a CD that's just matured. We have a highly unusual mortgage as a benefit from my husband's employer. 4.5% for 30 years, but the unusual thing is the repayment structure. The terms of the mortgage require us to pay no principal and only 1/2 the interest (2.25%) annually if the house does not appreciate in value. If the house appreciates, we pay either the amount of appreciation or 2.25%, whichever is less. There is no requirement to pay the principal until the end of the loan (30 years or when we sell the house). This is obviously a great deal for a loan, but I'm not sure what our strategy should be for paying down the principal. We have a CD that just matured that would cover 2/3 of the principal of this loan and we're trying to figure out how much of it we should pay down versus invest or save as an emergency fund. Any thoughts?
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