Here’s a quick talk about amortization and how it affects the interest curve of a loan…
If you are interested, here is the loan amortization spreadsheet I used in this video.
On most mortgages, a large percentage of your payment goes to interest for the first several years. The mortgage doesn’t really work in your favor until about the 20th year. Have a look at this chart…
The point at which your equity rises above your debt is where this financial instrument is good for you. Before that it’s good for the bank and bad for you.
Do you have additional insight on amortization or loans? Leave a comment!
Very well done Mark! Very straight forward and easy to understand.
Thanks Scott! That’s a nice complimet comming from the mastuh!
My brother made some interesting email conversation on the topic. Got me thinking about the overall picture of risk. So for anyone interested I ask the question:
How much risk do you hold by carrying a mortgage for 30 years and how quickly could you contribute to a retirement account if you owned a home free and clear?