Berkeley CSUA MOTD:Entry 30619
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2024/12/24 [General] UID:1000 Activity:popular
12/24   

2004/6/4-5 [Finance/Banking] UID:30619 Activity:high
6/4     Loan experts. What are the difference between the two scenarios?
        1. borrow 100k at 6% for 30 years, pay off 50k immediately
        2. borrow 50k at 6% for 30 years.
        According to my loan program, I pay quite bit more in 1. but
        shouldn't the two be the same? ie, in 1, the interest also
        starts pretty much with 50k principle.. what causes the
        difference? Thanks.
        \_ Your 50k must be 50k of the principle--that is 50k + 1st month
           interest + same principle as loan 2.
        \_ As above says, but also make sure your loan doesn't have any
           pre-payment penalties and as they say make sure your 50k is going
           to principle, not interest.  Then it becomes the same.  Almost.
           You'll end up paying a few days interest on that 50k.
        \_ If this is a mortgage - like loan, some have origination
           "points" or fee structures based on the principal amount.
           nitpick: principal not principle.
2024/12/24 [General] UID:1000 Activity:popular
12/24   

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