Quote:
Originally Posted by Sly
What does a 20% down payment have to do with a $200,000 loan? A $200,000 loan is a $200,000 loan. It doesn't matter what you paid on top of that as a down payment.
If your house was $200,000, you put down a 20% down payment of $40,000, you would then effectively have a $160,000 loan (assuming you did not add on another $40,000 to the loan just for the hell of it), not a $200,000 loan.
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Yes, I agree. You are correct, I'm trying to understand myself. Like I said I've read this before and have been told this by many people/instructors. It's the same principle as the make a payment every two weeks. You are only adding one additional payment a year which reduces the principle.
Anyway, the answer the org question should be.
If you can make more money at a higher rate than your mortgage rate, then don't pay down your note.