I’m having a brain fart and can’t figure something out. Here’s the situation:

The difference in monthly payments between a $400,000 30-yr fixed mortgage at 6.5% ($2528.27/mo) and the same mortgage at $350,000 ($2212.24/mo) is $316.03. In fact, any $50k difference, assuming all other loan parameters are the same as above, will always result in a difference in the monthly payment of $316.03. Now- if we take that $50,000 and invest it at 6.5%, we only get a monthly interest rate of $270.83.

Why is the $50k mortgage difference at 6.5% not the same as the $50k investment at 6.5%?