THE SCENARIO
Several years ago I borrowed some money to buy a condo. Today, still owe $66,924.65 on this mortgage, with payments of $352.16 per month, at a rate of 3.875%.
If I suddenly came into a pile of money and decided to pay off this mortgage today, how much interest would I avoid paying over the remaining life of the mortgage by doing so?
For simplicity, assume that there's no partial-month interest to satisfy and no pre-payment penalties involved.
THE SOLUTION
This problem is a three-stepper.
- The first thing we need to do is figure out how many payments are left on the mortgage.
- Then we need to figure out how much the total payments over that number of months would have been.
- Then we need to subtract the amount I'd pay today to satisfy the mortgage f... Read more...
