Principal / 001
See what you owe.
See what it costs.
Debt moves money from your future into your present.
This model shows the interest price of that move.
The exchange
mortgage / fixed rateYou borrow$400,000Money now
30 years→6.75%
You return$933,981Money later
The difference is interest—the price shown here for borrowing.$533,981
Every dollar returned
43% principal / 57% interestMonthly principal + interest$2,594
Total interest$533,981
Down + principal + interest$1,033,981
Price multiple2.07×
Where each payment goes
Interest → principalAfter year 525% paid for
Principal + interest paid$155,664
Went to principal$24,497
Went to interest$131,166
Balance left$375,503
$124,497 of the original purchase price is paid for. Of the money sent to the lender so far, 16% reduced the debt. Actual equity depends on current market value. Net sale proceeds also depend on transaction costs.
Move one thing
Watch the future changePay more each month
Interest avoided$140,097
Debt ends sooner6Y 8M
$2,844 per month. Paid off in 23Y 4M. Assumes extra payments are applied to principal with no prepayment penalty.
Lower the rate6.75%→5.75%
Less each month$260
Interest avoided$93,636
1.00 percentage point changes the price, not the thing.
The monthly payment is not the price.
Principal reduces what you owe.Interest is what time costs.