No harm in that.I paid off a bunch but the lowest rate was 6%+ and they were seller-financed or commercial,  representing more pain and risk than what you most likely have.Last consideration is if you have a small balance loan but are running into conventional loan limits of 4 or 10. 

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Some HMLs offer JV lending which would require a second HML for the balance.- the 1st HML pick up the purchase price 70% to 75% LTV & the 2nd HML picks up the rehab costs.

Trying to calculate accumulated interest on the outstanding rent balance is too much effort for what you will collect ...

I am quite sure a bank is going to want the players to have a lot of experience in the space... very good balance sheet.. and probably have the land paid for in cash.. as their skin in the game.. with those ingredients you can get this done. 

Certainly it decreases demand but to go to a historically balanced market with our current supply would mean that we would hit record low sales. 

If I were you, I would float buying it off the owner before the foreclosure and see what happens.The key words in the OP's post was "Principle Balance".

Personally, this market also strikes the balance of being somewhat close to home, while remaining far enough to force me into building scalable relationships and business processes.What I can offer: I am continuing to learn about real estate and am several months away from the capital necessary to finance my first deal.

For example if I pay an extra $1000 on the 15th, would that reduce the amount of interest I pay next month since my mortgage balance is reduced by $1000?

Look at your checkbook, is the balance where you would like it to be?