The Illusion of the Monthly Payment
Banks sell loans based on the monthly payment, blinding borrowers to the total cost of capital over a 30-year timeline. Due to the way amortization works, the payments in the first decade are deeply skewed toward pure interest.
How Amortization Traps You
In month one of a 30-year, $400k loan at 7%, your payment might be $2,661. However, $2,333 of that goes straight to the bank as interest. Only $328 actually pays down your debt. You are renting the money at an extraordinary premium.