https://archive.freecapitalists.org:443/forums/5.aspxenCommunityServer 2008.5 SP2 (Build: 40407.4157)https://archive.freecapitalists.org:443/forums/thread/442366.aspxMon, 24 Oct 2011 03:02:00 GMT944abf2b-d1be-4bf2-990d-438cb0e377e9:442366Justin0https://archive.freecapitalists.org:443/forums/thread/442366.aspxhttps://archive.freecapitalists.org:443/forums/commentrss.aspx?SectionID=5&PostID=442366<p> I answered my own question while pondering something else. &nbsp;He is correct, as far as I can tell, that the percentage points are what matters. &nbsp;The difference is 7%, which is the amount of annual growth he would have on that money after taking into account the 4% loss due to the interest against the loan. &nbsp;</p> <p> &nbsp;</p> <p> In the words of a gamer buddy of mine, &quot;I herpederped&quot;.</p> <p> &nbsp;</p> <p> Thanks</p><div style="clear:both;"></div>https://archive.freecapitalists.org:443/forums/thread/442362.aspxMon, 24 Oct 2011 02:24:45 GMT944abf2b-d1be-4bf2-990d-438cb0e377e9:442362Justin0https://archive.freecapitalists.org:443/forums/thread/442362.aspxhttps://archive.freecapitalists.org:443/forums/commentrss.aspx?SectionID=5&PostID=442362<p> As a precursor, I am going to say that I will do my best to frame this in the most understandable way possible. &nbsp;My thoughts sometimes come off as jumbled to anyone I know, though I understand them perfectly, but let me know if you need further explanation. &nbsp;I am in a debate with my boss and he is trying to say the amounts of money do not matter, only the percentage points. &nbsp;I may be wrong, but I&#39;m looking for some helpful advice for the argument, unless I am wrong of course. &nbsp;</p> <p> &nbsp;</p> <p> Here is my questions about banking: &nbsp;If I were to take a 15 year loan on $125,000 at 4%, I am looking at a total of $200,000 for the loan. <strong>&nbsp;If I wanted to make double payments, do they recalculate the rates based on that?</strong> &nbsp;As far as I can tell, the banking institutions around me only offer set lengths of time for loans. &nbsp;In this case it&#39;s a mortgage for a house. &nbsp;The only options they seem to offer are 15 and 30 years. &nbsp;</p> <p> The other part of my argument kind of hinges on this. &nbsp;He is arguing that if someone can take that extra money of paying a mortgage in doubles, and invest it into a portfolio that has an annual growth rate of 11%, they would be better off doing that. &nbsp;</p> <p> My side of the argument (and<strong> I may be over thinking this, so feel free to tell me if I am</strong>) comes out something like: &nbsp;If they can half the amount of time to pay off the loan, then they are cutting the interest by $37,500. &nbsp;</p> <p> &nbsp;</p> <p> <strong>So, it&#39;s only worth it if:&nbsp;</strong></p> <p> Total interest acrued after 7.5 years &gt; $37,500</p> <p> The other advantages would be getting a loan payed off earlier because outstanding debt is a negative asset. &nbsp;</p> <p> &nbsp;</p> <p> Neither of us are financial experts. &nbsp;Just a random debate we got into. &nbsp;Only, I have zero experience with a mortgage because I have little interest in owning a home in the current economic state, and he has a home he is currently paying a mortgage on. &nbsp;This is just something I have been working over in my head. &nbsp;Thanks for any help. &nbsp;Tell me if you need more info.</p><div style="clear:both;"></div>