So, whether ‘early’ or ‘late’, your $1 is compounded over the rest of the life of the loan at the rate of the note (5.5% in JLP example).

It doesn’t matter if it is the first payment or the last, you still get the same ROR regardless.

One other comment: It is interesting that you chose to make your table with interest fixed at $208,808. In reality it is the principal that is fixed at $200,000, with the interest variable up to a maximum of $208,808. It is a personal decision if someone wants to pay $208k in interest, but it is by no means a contractual obligation to do so.

Good points, all.

I don’t think it’s misleading. It’s just another way of looking at the mortgage.

Whereas, with a 15-year note, once 58% done (8.7 years) you would’ve paid off 48% of the principal.

I think the “Percent of Loan Paid” column is misleading, since after the first year on the 30-year mortgage, you have only paid off 1.3% of the principal balance (not 3.3% as you seem to imply). You are basing the column on number of payments, instead of on principal balance (which is what matters when it comes to refinancing, etc).

Nobody says they are “half way” when they reach payment number 180 on a 360 month schedule. You are “half way” when you’ve paid half the balance which is around year #20 for a 30-year loan.

This is exactly the converse to what you are saying with interest (half the interest is paid in the first 10 years) — which means half the principal is paid in the last 10 years.

The % paid towards principle the first month on my 15 year loan is the same or close to the % of the loan going towards principle, as the 16 year first month payment on a 30 year loan!!!!!

Significant to your readers would be the acceleration of this 50-50 point w/ a 15-yr vs 30-yr loan. If you re-run your numbers w/the revised 15-yr term you’ll see the turning point is much sooner. Thus showing that “time value of money” works even when in debt!

With our 15-yr refi loan, our turning point is within the 1st 6 pmts.

These loans seem “front-loaded” only because you are not obligated to pay more principal each month. But, as you pointed out, you can easily add your own extra principal payment to pay off your loan faster.

Ignorant people, who don’t know the first fact about mortgages, nor how to calculate interest, like to use the fact that you pay so much interest in the beginning as “proof” that banks are out to screw us through these loans.