With elevated interest rates, securing a mortgage to buy a house can be challenging. But what could be more surprising is how the numbers actually work once you start making mortgage payments.
“New mortgage math is brutal,” Austen Allred, co-founder and CEO of online coding bootcamp Bloom Institute of Technology, wrote in a recent tweet.
Allred explained that if you purchase a $1 million house with a $200,000 down payment and get an $800,000 mortgage at a 7% interest rate, in the first three years you’ll be paying $193,000.
But because of the high-interest rate, a significant portion of your payments would go toward interest, leaving a substantial amount still owed on the principal.
“After those $193,000 of payments your $800,000 mortgage is now at $774.5,000,” he said. “You paid $166,000 in interest, $25.5,000 in principal.”
The tweet has since received 7.7 million views and more than 31,000 likes.
In a follow-up tweet, Allred pointed out that his example assumes “a lot down and perfect…
2023-08-07 13:07:51
Link from finance.yahoo.com
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