Honda Car Forum

#31 (**permalink**) 11 Apr 2004, 01:14 am

Casey wrote:

> Joseph Oberlander said...
>
>>Casey wrote:
>
>>>I haven't seen *any* mortgage loans like you're describing and I work
>>>with a lot of mortgage brokers. There's way too much competition in
>>>the business for someone to accept that type loan. Even a prepayment
>>>penalty (6 months interest) is a hard sell.
>>
>>It must be different out here. My friend has a loan through
>>Countrywide (was Wells Fargo) - and they all front-loaded
>>the interest on the entire loan. 4 years and he'd only built
>>up 5% equity on a 30 year loan.
>
> Yeah, but that's the way a 30 year mortgage works. You pay simple
> interest on the unpaid balance. It's not "front-loaded", it's just
> that you're paying interest on a large balance. About 4 years into the
> loan, you probably would have paid off about 5% of the original
> principal amount. As the principal owed decreases, the interest
> decreases, and the amount going to principal each month increases.

Right. OP should also look at the effects of paying an extra $50/month
(going towards the principal). The effect over 30 years is staggering.
Actually, the mortgage will be paid off sooner than 30 years and the
total amout of interest paid much less than the amortization table,
based on the minumum monthly P&I, shows.

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