/biz/ - Business & Finance

splitting mortgage/principal is such a stupid way to view it.

>>55546420
he's not even including property tax and tipping your HOA

>>55546420

What's not to get? You are paying 7% interest per year on $800,000 before you even touch the principal and build any equity.

$56,000 per year in just interest which is around $4,666 per month.

>>55546453
Jewish hands typed this

>>55546420
Interest on houses are high as fuck
You dont pay the principal until interest is paid off. Interest accrued fast as fuxk
First few years you pay mostly interest and tiny bits of principle.
Thats why its better to make bigger payments at the start and start hitting the principle.
Me, i prefer to not play this game and just be homeless

>>55546420
>800,000 x 7% = 56,000
You generate 56,000 more debt the first year due to interest.
You do this for the entirety of the loan.
You pay 5322 a month (63864 per year)
So you have 800,000 + 56000 (interest).
You paid 63864 off
856000-63864=792136
>Welcome to year two
$792136x7%=55449.52
...
And the cycle repeats until Jews have all your money.

>>55546492
Ok its just the way he explained it threw me off.. how is the 25.5k principle calculated? just a standard rate?

Heres the thing about mortgages - if your house appreciates enough, you dont have to keep paying your mortgage. You can sell it at the higher price, use the proceeds to cover the remaining mortgage, and pocket the difference. So depensing on how much and when you expect to sell for, it might be worth paying the jews 4k a month for a couple years

>>55546575
Because the home price is going to go above 800,000 with rates at 7%?

>>55546420
Google "amortization schedule calculator" and you'll get what he's talking about. Most of what you pay in the beginning is only the interest on the loan.

>>55546525
So essentially, in one year of paying 5.3k a month, you paid off only about 8k on the original value?
WHY the fuck does anyone agrees to that? Literally better to save up money and invest until you can buy the house with your own money.

>>55546535
I think this missing piece od the puzzle is the term of the loan which he leaves out. Home loand are commonly 30 years, so the recirring monthly payments are calculated based on the loan being paid down to $ at year 30

>>55546420
>>55546492
>>55546525
>>55546590
Okay, I get it but do people not put a down payment?

>>55546420
It means all that matters is the monthly payment you can afford and it's currently overpriced.

>>55546596
>Literally better to save up money and invest until you can buy the house with your own money.
because the bank fronted you 800k
save up? Sure save up the entire 1 million

>>55546596
>Picrel
Kys nigger faggot
My fault for not realising your a newfaggot plebbit cunt. Go back.

All you need to know its a boomer ponzi thanks for playing

>>55546420
Now you invest those $200k down payment into BTC, get $1 million and buy the house in cash next year.

>>55546627
Your math's sound but your skills at interpreting anything else are deplorable.

>>55546535

In that example, its just the difference between required monthly interest payment and the extra he is paying to break into principal payments.

Interest per month is around $4,666, so in the example he is paying about $656 into the $800,000.

The $4,666 decreases slightly every month he pays into the principal.

Compound Interest is rather jewish.

I can't remember who said the quote but its something along the lines of

"If you aren't earning compound interest then you are most definitely paying it."

>>55546601
The amortization schedule still applies to the amount of the mortgage (loan) no matter the down payment. In OPs example they put down 20% which used to be standard but is not as common in today’s scam economy.

>>55546639
Don't care, go back

>>55546596
If buy a house then later you sell it, then you recoup whatever equity is built up. If you rent an apartment, when you leave you get nothing.

Partially recoup what you put into housing or lose everything, which is better? Some people even have their homes appreciate in value and they come out ahead on selling a house. Renters only get their rent to increase each year.

>>55546601
>Okay, I get it but do people not put a down payment?

In OP's example the guy put 200,000 on a 1,000,000 home thus the $800,000 remaining. 20% is considered standard.

Welcome to the amortization schedule for every loan ever. With your typical 30 year mortgage you basically end up paying for two houses by the time it's all said and done.

That's why if you don't want to be a good goy and pay the banks more interest, you save for a bigger downpayment, get a shorter term loan lol a 15 year, and/or make extra payments and pay the loan off as quickly as possible. Or just buy stuff in cash and don't take out the loan to begin with.

How do the Jews really calculate monthly interest on a mortgage? I get his number with (.07 / 12), but I would have expected ((1.07^(1/12))-1).

>>55546525
Also in play here is that you only paid $7864 off the principle in the first year. You are legally allowed (though not always advantageous) to pay off extra principle in your payments. Slowly you end up paying more and more of the principle as a ratio of each monthly payment but it’s a long road to get there. A mortgage is usury as fuck but what can you do

>>55546680
>A mortgage is usury as fuck but what can you do

Isn't mortgage Latin for death pledge or death bond etc? Something like that kek

>>55546588
The house was $1M, but you paid 200k up front so the interest is accruing on the 800k. Your house should hopefully go up from 1$M, so when you sell you'll get your 200k back, plus any other of the principal you paid in, can pay off any outsanding loan balance, and can keep whatever extra as profit. Hopfully the profit witll exceed the interest you paid over the years. Plus the longer you hold, the more inflation works in your favor (5.3k a month sounds like a lot now, but in 10 years it might seem like a bargain vs rent or other home prices)

>>55546648
Why are you renting an apartment for 5 thousand dollars a month? Get a 1000 dollar place, invest 4 every month for 3 years which is 144k, double it, and you got yourself a decent house.

>>55546596
Anons on 4chan will make statements like these and then make degen bets on crypto with 50x leverage

>>55546707
>Your house should hopefully go up from 1$M, so when you sell you'll get your 200k back
But then you need to buy a new house which will likely have increased in value at a similar rate as the one you just sold so whats the point unless you want to downsize/downgrade

>>55546751
Stop thinking 4chan users are a monolith, sweetie. It might just save your life.

>>55546648
I rent an apartment for 1400 a month. There is no world where the return on investment of a house outstrips the savings of living in squalor.

>>55546736
>just surrender 100% of your living cost goy. Don't forget to tip your landlord!
Oy Vey!

>>55546644
>>55546654
If someone is buying a 1m home then 20% isn't enough for a down payment. This isn't the 60s
20% down for a 250k-300k. That makes sense. Down payment should be relative to how much the house cost. That's common sense

Hard to imagine house prices going up for the next 30 years. Seems like anyone buying a house right now is getting scammed. Unless you’re building a portfolio and a business, I’m not sure I see the point.

>>55546763
True but still better than renting where you stay at 0 forever and cant afford anything

>>55546804
> just save $500k and pony it up for a down payment

>>55546791
1000 is not 100% of 5000.

>>55546763
This is exactly the scheme. Baby boomers were able to buy a house, watch the price skyrocket, sell it, and use the proceeds to downsize and fund retirement.

The real trick to home "ownership" is to look up local squatters rights in your state/province. For example as a Leaf I need to find land that is not currently in active use and live there for 10 uninterrupted years without paying some form of rent at which point I can hire a lawyer to move it in to my name. My dream is to one day find an empty house some chinaman is using to launder money with and quietly get settled in by changing the locks and calling up the hydro and internet provider to move that shit to my name.

>>55546828
The average first time homeowner is 36 years old.
How is that not possible if you started working from 22 to 36 and been financially literate. That's 14 years of waging and being smart with your money and goals in life

>>55546420
Whats new about that? Retards finally understand mortages? Lol

>>55546420
>>55546596
>>55546601
>>55546680
I don't get it, why so many people can't appreciate possibility of getting a mortgage. Ungrateful brats.

>>55546420
Interest is front loaded so the banks can make their money even if you settle the balance earlier than scheduled.

I think I'll just kill a jew and take his house

>>55546420
he voted for it!

>>55546596
>Literally better to save up money and invest until you can buy the house with your own money.
Even then the parasites will still suck your blood.
>Oh you have money in the bank? now you owe taxes filthy plebeian.

>>55546420
yeah these kind of deals only work if that house is (expected to be) worth 1.6 million in 3 years, giving you an easy 5x for your initial investment minus "renting it"

holy fuck this thread is embarrassing. further proof 90% of this board are financially illiterate pajeets

>>55546420
look up debt amortization and how it works. The interest is charged first so the first few years of your mortage you only pay the interest while in dact your actual debt is just slightly going down. Here in my country the bank is legally required to allow us to amortize the debt interest free.

>>55546420
>Someone explain this mortgage math to me?

>>55548661
>>55546575
>>55546492
So from what I can gather.
Say you take a mortgage. Then for some reason you are able to fully pay the house within the first few months(won the lottery, inheritance, whatever).
Does that mean you have to still pay the full interest rate estimated on your mortgage's planned duration(20-30 years)?

welcome to fiat money and kike predatory interest, the goal is eventually to get to 12% mortgage. After that it's pretty much impossible to ever pay of the principal for your average goyim. You will own nothing and be happy.

>>55546676
Yeah, that's how they do it. It's kind of a scam.

>>55546420
Just pay the minimum with no down payment, chud!

Oh fuck, he's not wrong.
Look at it another way. You have an 800k loan that has 7% interest per year. 800,000 x 1.07 = 856,000. And then 856,000 x 1.07 = 915,920. And then 856,000 x 1.07 = 980,034.4. You HAVE to pay interest before you touch principal, which means out of the 193,000 you put in to pay off your loan 980,034.4 - 193,000 = 787034.4
You paid off about 13,000 dollars.
Now this is really simplified and doesn't account for the interest being addressed each year, but I hope it helps you come a little closer to how big of a scam it is.

>>55546596
Because most people aren't mathematically inclined and Jews take advantage of this.

>>55546467
stop tipping hos bro
they aint worth it
hoeflation is OUT OF CONTROL

this is also not calculating maintenance and other bs that comes along. if you're a retard then buy a house with a loan and be a debt slave. if you want to make it, invest.

>>55546420
Need to see more of this when people are getting shit on for renting. Who is going to buy this house 30 years from today so that you break even or make the 120% profit like boomers? It needs to sell for over a million maybe even 2 million. Based on current wage trends..umm

>>55546453
No, it's the only sane way to view it.
Big mortgages are never worth it.

>>55548805
Depends on the contract and if you live in a shithole country that allows fraud like that.

>>55546420
The way mortgages are structured is the majority of the interest is paid on the front end. Like, 99% of your first payment goes to the bank. This is why it is imperative to pay extra on your mortgage because it hits the principal and then recalculates the interest payments and is the quickest way to pay down your mortgage.

>>55549374
Also factor in the mortgage is so expensive no one has extra money for an extra payment. If you current rent is a $1000 or less than a mortgage then probably better off renting and saving the extra $1000. Rent also includes property tax that increases endlessly.

Buying a home and taking all this interest to the face only makes sense if the home is going to go to the next generation like your kids.

>>55548805
No, because suddenly the interest rate against the money you borrow is still 7%, but you’ve paid off the full principle, so the money you’re borrowing is $0. If you pay off the principle early, you’re done.

>>55549425
Instead of renting the trick is to live with your parents until you can afford buying with a minimal mortgage.
If you can't live with your parents then you've been scammed by the universe.

>>55546420
Threads like these truly reveal how low iq the majority of users on this board are.

>>55546782
at least the guy getting raped on the mortgage can roll his equity into another property. you however have zero equity in any property.

>>55546420
If you are reading this comment your parents will die within 5 years. To undo this curse you need to copy this and paste it in 2 otherthreads. i'm so, so sorry,please forgive me.

>>55549526
Not sure if you're 12 or 70.

>>55549560

>>55546453
This

>>55546877
Because I'm 33 this year and have been a NEET for the past 10 years with a nw of $20k in crypto

>>55546420
It's a 30 year loan. if you want to pay less interest and more principal, proportionally, get a shorter term duration.
Do people really not understand this?

>>55546877
>Dude just save an average of $35,000 every year

>>55546420
It's just like student loans and anything else once the juice scammers start with the financing usury to make it easier (rob) the boomer swine. Prices skyrocket so nobody can do it the correct way anymore, which would be to save up and buy the house all at once. Of course, this assumes that you can actually own a home, which is not the case if you have to beg the government to make any little change to "your" land or """your""" home.

It's all so tiresome (the wrong side won the war).

>>55546877
because by the time you save 500k after a decade of working, the price of the house will have doubled. you cant get ahead

>>55551548
Get maximum duration, but try to pay it off much much faster. Gives more leeway if you're low on cash for a short period.

>>55551734
Wait so if the value goes up you have to pay more than the initial price agreed? If that’s the case then why do people act like the value going up means profit when you sell? You’ve just confused the fuck outta me

>>55546676
They front load the interest. It's called an amortization schedule. It's so you can't pay off your house faster and fuck up their profit. This is why rent is so high, every boomer is paying this on 10 houses.

>>55551886
no the other anon is talking about saving up for a downpayment which is what i am saying is impossible because the price of the house will always go up faster than what you can save. the value of the house doesnt change what you owe on your loan. the system is set up so if people want to own a home they need to be in debt for their entire life, indebted people (slaves) are much easier to control and be coerced into doing anything

>>55546420
Will everyone just stfu now.

>>55552050
>the price of the house will always go up faster than what you can save
Not really if you don't try to buy expensive...
If you make 30k a year, that shack for 100k isn't gonna be 300k in 5 years. You can easily save up 50-70% and mortgage the rest.

>>55552051
This math doesn't refute that it's utterly retarded to get an 800k mortgage and then just pay the minimum first few years.

>>55552050
>saving up for a downpayment which is what i am saying is impossible

good fucking god you are a retard, you can buy a home with 5% down. If I have 200k and a 220k income a year, why in all that is holy would I throw it all into my house? No I put as little down as possible while the rest gets a return in the market. End of every year I can decide to pay down more. Did my 200k make 10% or more is it compounding every year? The difference in 5% down and 20% wont change your rate much if anything you get a worse rate the more you put down, depending on the size of the loan. Its 1.3k more a month with only 5% down, thats 15k extra a month. That 200k got a return of 20k in market. I take the money I've been saving and pay 20k to my mortgage in extra payment while I let my 220k ride so next year its 242k. Inb4 omg it doesnt increase 10% every year, Yes it does on average. I wouldnt buy a million dollar home until I had at least 450k laying around. Which I will after buying my first home for 225k then selling it for 350k, ill spend the cost of a new car to remodel and update this house. 5 years later I have 100k profit on home sale plus all the money I've been saving and getting returns on while making 150-220k a year. Wife works and usually one of us makes 6 figs, if we both work 80k jobs that 160k a year. By your mid 30s if you are not making at least 80k you need to really consider wtf you are doing.

>>55546596
Boomers made a retarded real estate market. If trends continue, you buy a house now and get into debt, but it'll double in price in 30 years when it's paid.

>>55552136
yes , yes it does, >>55552173

>>55552180
The point btw is not to make money from it, it's to be able to a afford that specific house. I wouldn't have been able my current house if I had saved for the last 3 years instead of just buying it in 2020

>>55546499
>You dont pay the principal until interest is paid off.
No, you pay more principal as time.goes on, but you never start at zero. The payment stays the same but you start at like 90% of your payment is interest, then as your mortgage matures you're paying more on principal.

>>55546420
Common americans are so dumb and immature...
7% of 800k + 7% of 800k + 7% of 800k = 193k

>>55552122
>>55552173
follow the thread. were talking about a million dollar house and anon is saying 20% downpayment isnt enough

>>55552199
>buying it in 2020
I agree with you in sentiment but this is a retard point. You "lucked out" timing the market. If you have to time the market to afford a house , it generally means you cant afford the house. This is like saying omg just buy BTC a 5k in 2020 march. World collapsing hmm you know what I should get, a 30 yr commitment. Its either retarded or genius.

>>55552239
>saying 20% downpayment isnt enough
im saying its too much, learn to read. I give up this is like talking to a wall.

>>55552253
goofball

>>55546804
>>55546828
>>55546877

>>55552239
Enter recession.
House value crabs for 10 years
Congratulations, you've just lost all your equity paying interest on a ridiculous sum.

>>55552286
there is no need for naming calling fagget nigger coon! Just fucking ban me please, my life will improve by never coming to this board ever again.

>>55552347
>House value crabs for 10 years
You are saying it doesn't drop in price and I get all my money back because 0 taxes on the sale since I've own the home for 10years built equitiy. Also I can now refi at an even lower monthly and better rate. I remember when I started in biz so many years ago. I thought everyone was so smart, I was actually just completely retarded. Now im of average finance intelligence and everyone else is the retard. I guess I should just be happy. Its sad tho because I feel like there no one else to learn from. Lonely at the top.

>>55546420
we know

fun fact: this is by design

>>55554208
>You are saying it doesn't drop in price and I get all my money back because 0 taxes on the sale since I've own the home for 10years built equitiy
You missed the part where you had 10 years of high inflation and interest, effectively costing you all the equity because you were retarded and took a million dollar mortgage.

Don't forget home"""""owners""""" insurance and property taxes on the home you """""own""""". Not to mention fixes and upkeep, wouldn't want """""your""""" property to to fall into disrepair.

>>55546453
Explain.

>>55554431
These things aren't really that expensive desu, a lot less than renting. If you do mortgage + tax + maintainance + insurance you usually end up around renters cost but with the addition of actually building equity so you're still saving even if it looks invisible in your bank account. Only an issue if you fuck up and buy a shitty home or if you're trying to be a landlord.

>>55554431
Home ownership in the US is a scam. In some countries you just pay an out the ass upfront property tax, none of this annual pound of flesh shit to keep the spic-nig cycle afloat.

>>55552241
I didn't time the market you retard, I thought I was getting fucked hard at the time because home prices were up 50-100% since I had bought my previous house.

>>55549303
Not a good idea, a bunch of HOA's were foreclosing on houses in different states because the owners didn't pay their HOA fees.

>>55546662
>Gets raped by rising hoom prices and inflation

>>55546420
At that point, you're just paying rent to the bank who actually owns your home, no?

>>55554476
What country

The number of retards buying million dollar homes making 100k is ridiculous. Pre-covid, you were considered an idiot for buying a one million dollar home if your net income wasn't over 500k. Now it seems like everyone is paying out the ass for houses and no one at all is bothering to do any math. I know plenty of people who make around 100k and they have 500k mortgages. The interest alone guarantees you're going to be wage slaving for the rest of your life.

>>55555375

Inflation adjusted it's not bad. Especially since you can always refinance if rates go low.

Also you can always just.. pay more and avoid interest that way.

>>55548909
this will truly be the second gilded age for US and the west isnt it?