# Math and/or investment folk, please come hither... **URL:** \ **Category:** Factual Questions\ **Created:** [August 1, 2007, 8:03pm UTC](https://boards.straightdope.com/t/math-and-or-investment-folk-please-come-hither/414030 "2007-08-01T20:03:14Z")\ **Posts on this page:** 8\ **Page:** 1
**Author:** ![corkboard](https://avatars.discourse-cdn.com/v4/letter/c/e9bcb4/32.png) [@corkboard](https://boards.straightdope.com/u/corkboard)\ **Post date:** [August 1, 2007, 8:03pm UTC](https://boards.straightdope.com/t/math-and-or-investment-folk-please-come-hither/414030/1 "2007-08-01T20:03:14Z")
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%? ---
**Author:** ![gazpacho](https://avatars.discourse-cdn.com/v4/letter/g/6f9a4e/32.png) [@gazpacho](https://boards.straightdope.com/u/gazpacho)\ **Post date:** [August 1, 2007, 8:16pm UTC](https://boards.straightdope.com/t/math-and-or-investment-folk-please-come-hither/414030/2 "2007-08-01T20:16:06Z")
Because you are paying off the mortgage. The amount of principle that you pay per month goes down if the total principle goes down. ---
**Author:** ![corkboard](https://avatars.discourse-cdn.com/v4/letter/c/e9bcb4/32.png) [@corkboard](https://boards.straightdope.com/u/corkboard)\ **Post date:** [August 1, 2007, 8:19pm UTC](https://boards.straightdope.com/t/math-and-or-investment-folk-please-come-hither/414030/3 "2007-08-01T20:19:20Z")
But the amount I pay each month doesn’t change throughout the entire 30-year life of the mortgage. ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [August 1, 2007, 8:24pm UTC](https://boards.straightdope.com/t/math-and-or-investment-folk-please-come-hither/414030/4 "2007-08-01T20:24:20Z")
> **[Mortgage Calculator | Bankrate](https://www.bankrate.com/mortgages/mortgage-calculator/?interestRate=6.5&loanAmount=400000&monthlyAdditional=0&monthlyPayment=%2B%2B%2B%2B%2B%3D%3D%3D%3E&nrOfMonths=360&nrOfYears=30&oneAdditional=0&oneAdditionalMonth=7&oneAdditionalYear=2007&paidOffDate=Aug%2B1%2C%2B2037&showAmort=Show%2FRecalculate%2BAmortization%2BTable&startDay=1&startMonth=7&startYear=2007&unroundedPayment=1097.749117045651&yearlyAdditional=0&yearlyAdditionalMonth=7)** > > Use our free mortgage calculator to estimate your monthly mortgage payments. Account for interest rates and break down payments in an easy to use amortization schedule. That’s a link to your 400k loan amortized out so you can see how the payments are applied. You’ll see that when the loan is 400k, the actual interest portion of the $2528 is $2166 which is 6.5% interst (over a year of course, per month it’s .542%). However that would be an interst only loan and the principal would never be reduced. What you need to understand is that with a normal non interst only payment, the rate you are given is how much interest is added on to the principle each month, not how much you are paying. ---
**Author:** ![Projammer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/projammer/32/559_2.png) [@Projammer](https://boards.straightdope.com/u/Projammer)\ **Post date:** [August 1, 2007, 8:48pm UTC](https://boards.straightdope.com/t/math-and-or-investment-folk-please-come-hither/414030/5 "2007-08-01T20:48:05Z")
Let’s see. $400,000: 6.5%: 30 years… 510,000 in _interest_ paid for a total of $910,000 for a $400,000 purchace… :eek: ---
**Author:** ![denquixote](https://avatars.discourse-cdn.com/v4/letter/d/b9bd4f/32.png) [@denquixote](https://boards.straightdope.com/u/denquixote)\ **Post date:** [August 1, 2007, 8:50pm UTC](https://boards.straightdope.com/t/math-and-or-investment-folk-please-come-hither/414030/6 "2007-08-01T20:50:36Z")
[QUOTE=McNew] 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%? [/QUOTE] If it were the same amount you would still owe the whole $400K at the end of 30 years. ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [August 1, 2007, 9:06pm UTC](https://boards.straightdope.com/t/math-and-or-investment-folk-please-come-hither/414030/7 "2007-08-01T21:06:51Z")
[QUOTE=Projammer] Let’s see. $400,000: 6.5%: 30 years.. 510,000 in _interest_ paid for a total of $910,000 for a $400,000 purchace… :eek: [/QUOTE] Over 30 years, I don’t think that is really that bad, considering the appreciation of home value (I’ve heard 6% per year is average) and inflation. ---
**Author:** ![corkboard](https://avatars.discourse-cdn.com/v4/letter/c/e9bcb4/32.png) [@corkboard](https://boards.straightdope.com/u/corkboard)\ **Post date:** [August 1, 2007, 9:39pm UTC](https://boards.straightdope.com/t/math-and-or-investment-folk-please-come-hither/414030/8 "2007-08-01T21:39:36Z")
:smack: :smack: Thanks for clearing the boogers out of my head.