Be advised: this thread is not for serious in-depth discussion of weighty topics (we have a link for that), this thread is not for anything Culture War related. This thread is for Fun. You got jokes? Share 'em. You got silly questions? Ask 'em.
- 113
- 2
Jump in the discussion.
No email address required.
Notes -
Who here makes extra payments on his mortgage? Or has a paid-off house?
I make extra payments, and looking through my amortization table just now I was incensed to learn that a full 75% of all of the reduction in our loan balance is solely due to our extra principal payments! What in the scam? (Edit: I guess I have to clarify that I am not retarded and do not believe that a 30-year mortgage is literally swindling me through nefarious trickery.)
Further, to say nothing of the compounded benefits, we have a present-day benefit in the form of $2,000 of saved interest, and we're still very near the beginning of our loan term! It's obvious when placed next to an amortization schedule that assumes we only make necessary payments.
(2/1/2026 Loan Balance)minimum payments - (2/1/2026 Loan Balance)extra principal - (sum of extra principal paid) = ~$2,000
It's amazing how quickly an amortization schedule gets insanely front loaded as rates go up. I have a sub 3% mortgage, in the first year my principle to interest ratio was about 2:3, maybe 4:5. In one more year, the 6th year of my mortgage, it will cross 1:1. At current market rates for the same amount, it starts off 1:4 or 1:5 and doesn't cross 1:1 until the 225th payment, 18 years in.
I don't make extra payments. A high yield savings account offers better return than paying off my mortgage faster. Now if it were a 6% mortgage, I'd probably be throwing as much as I could at it.
I have a worse rate than your hypothetical one unfortunately. What a difference a couple of years make.
Yeah, my wife thought I was insane. The federal reserve was spouting some bullshit about inflation being transitory, and I was ranting and raving "They're lying! We need to buy a house NOW if we are ever going to." Caused some friction the first year or two, but boy howdy have I been vindicated since.
I made the same argument at the same time, but bought a bit later than you for life reasons. And then recently had to spring for a new one because my 3bed/1 bath wasn't large enough for the family.
Thing is, it mostly turns into a zero sum game. When rates were low, people could make crazy offers on houses because their monthly payments were so low. Now that rates are high, there's less competition and prices...well, they didn’t go down, but they also didn’t go up as much. And you can just refi in 5 years. I think you would've been fine buying a bit later.
My brother, on the other hand, who bought in the early-mid 2010s has seen his home triple in value...
Eh, "fine" is relative. Sometimes it feels like I really got the last house I could have gotten. We spent all spring 2021 looking, things were drying up by summer, and the noises the fed were making were increasingly concerning. One year later rates had nearly doubled. At the worst of it, when rates were topping 7% and prices were still going up, I would have been looking at a mortgage getting really close to twice the one I had. Now it's a mere 50% higher. Then again, I got a house which had plenty of room to grow, and I'm not at risk of needing to climb the "housing ladder" any time soon.
I'm building equity in the home incredibly quickly, because I pay down the principle so much quicker, making it easier to buy a new home when I have to. And the money I pocket with a lower mortgage goes straight into the S&P500 too.
I mean, sure, if I absolutely had to, maybe I could have stretched and gotten way less house for way more money with a far worse mortgage a year or two later and been "fine".
Instead I'm great, and it's a hell of a snowball effect.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link