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Your calculations don't make sense. You're calculating interest on the % of principal paid off, instead of the total principal. Also, if you move to another ho
by cpncrunch 11y ago
Your calculations don't make sense. You're calculating interest on the % of principal paid off, instead of the total principal.
Also, if you move to another house, there's nothing to say you have to get another 30 year loan. You could get a 20 year loan instead. You could also refinance your house with a new 30-year loan after 10 years.
- carsongross 11y agoYou can shorten the duration of loans, which is a great idea, but typically only in big jumps: 15 or 10 year loans. You can also pay down the loan faster or put up bigger down payments. Again, great stuff. However, many people don't do this and end up spending a lifetime in the early parts of a fixed-payment amortization schedule, where the realized interest rates are very, very high.
- maxerickson 11y agoThe number you use for principle doesn't make any sense. People are buying housing with a mortgage, not just the house (that is, living in a house for 5 years is worth more than $0). It's very true that mortgages are expensive and it's unfortunate that we have priced our housing market to 30 years of payments.