I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer go check it out

A $400,000 home with 5% down puts you at a $380,000 loan.

At 6.42% (averages rates right now on mortgage news daily) on a 30 year term, your principal and interest payment is about $2,382.

At the bottom of the chart you'll see the grand total...

and you'll probably notice that the interest is at its highest at the beginning of the loan, when your balance is the highest.

Here's what that looks like year by year:

Year Interest That Year Total Interest Paid
1 $24,271 $24,271
2 $23,985 $48,256
3 $23,681 $71,937
4 $23,357 $95,295
5 $23,012 $118,307
6 $22,643 $140,950
7 $22,251 $163,201
8 $21,832 $185,033
9 $21,386 $206,419
10 $20,910 $227,328
11 $20,402 $247,731
12 $19,861 $267,592
13 $19,285 $286,877
14 $18,670 $305,547
15 $18,015 $323,561
16 $17,316 $340,877
17 $16,571 $357,448
18 $15,776 $373,224
19 $14,930 $388,154
20 $14,027 $402,181
21 $13,064 $415,245
22 $12,038 $427,283
23 $10,944 $438,227
24 $9,778 $448,005
25 $8,534 $456,540
26 $7,209 $463,748
27 $5,795 $469,544
28 $4,289 $473,832
29 $2,682 $476,515
30 $970 $477,484

In year 1, you'll pay $24,271 in interest alone. By year 30, that drops to $970. Total interest over the life of the loan: $477,484, more than the home itself.

This is why even small extra principal payments early on make such a big difference.

I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer here's the book on reddit.

Originally shared by u/SamTMortgageBroker in r/NewbHomebuyer — view the original thread.