Submitted by eightvo t3_ym0015 in personalfinance
Let's say I have a loan of 179k @ 6.9%
The minimum payment is $1189.69 which pays it off in 30 years.
My 360th payment would be 30 years, I would have paid a total of
$428288.40 which would mean that I paid $249287.83 in interest.
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However, If I instead pay $2000/month I will have paid everything off on my 127th payment for a total of 254000 which is only $74701 in interest.
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By paying an extra 900/month I saved $174586 (nearly the entire amount of my loan to begin with).
The 900/month over 10 years cost me $108,000
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How would it be possible to convert $108000 to > $174586
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In order to use that $900/month to earn more then I would have saved I would need 6%> ROI >7%
There is no safe investment with that high an roi. CDs/ Bonds/Etc generally have ROIs of only 3 to 4%
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Wouldn't it be better to get a guarenteed 7% ROI by paying off my mortgage rather then roll the dice on riskier investments which are considered 'Good' at 7%? Like, if everything went according to plan I would end up with the exact same savings with a small chance of having saved more but also a good chance of having not saved that much...
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IDK... to me it doesn't seem like such great advice to not pay the mortgage down. With previous mortgage rates in the 3->4% range it makes sense, but as far as I can tell... with todays high mortgage interest rates it seems better to just pay down the mortgage.