It’s Friday in late August, so I know you feel like doing math.

Damn autocorrect.

I meant to say, it’s Friday in late August, so there is no way you feel like doing math.

So I will do it for you, because it’s actually kind of interesting.

Right now, every $100,000 in mortgage costs about $450 per month.

Of that $450 monthly payment, more than half of it is actually principal repayment.

At the current interest rates of 2.49% for a 5 year fixed mortgage, you would pay $447.47 per month in principal and interest payments.

Your first payment is $241 of principal repayment and $206 of interest.  That’s right, more than half of your mortgage payment is actually paying off money you owe, not just paying interest.

That means for the first payment, 54% of it is effectively a forced savings plan where you are paying down principal on the amount you owe.

Every subsequent payment has you paying a little bit more principal down, so it just gets better every month.

Over the 5 year term, you would pay $26,848 in total and from that, 57% would be principal.  That’s over $15,000 of the $100,000 mortgage paid down in the five years.

If we look at it from the interest side, you paid about $11,500 to borrow $100,000 for 5 years.

Which is cheap.  Insanely cheap.

This math is why the housing market keeps growing.  With interest rates so low, people are able to afford monthly payments for higher purchase prices and they can justify it by looking at how much principal they are able to repay.

If you own a home and have been considering selling it and buying something a bit different, give me a call so I can help run you through the numbers.

As importantly for when you are considering selling your home, I’ll give you an honest assessment of what it will take to buy a new place.  I’ve helped a number of clients sell and buy this year and while this market makes finding a home a challenge, I’ve been able to make it happen.

As always, I’d love to be responsible for what comes next.