Quote:
Originally Posted by Silver14
You may want to read up on amortization schedules.
https://www.bankrate.com/calculators...alculator.aspx
"Initially, most of your payment goes toward the interest rather than the principal. The loan amortization schedule will show as the term of your loan progresses, a larger share of your payment goes toward paying down the principal until the loan is paid in full at the end of your term."
What happens to most does not happen to all. I agree with the general idea of your post but not the absolutes. Statistically there will be outliers that will not spend the extra money. |
That was my point and I may not have said it well. One begins with a 30 year 5% mortgage paying mostly interest at the beginning. Then after 10 years refinances at 30 years at 3%. Now back to paying almost interest only in the beginning, is there really any overall gain? In effect you have a 40 year loan. Thirty years at 5% and a new 30 year at 3% and all of the time you have paid mostly interest and not much toward the principle.