As far as calming down, I'm perfectly calm but I feel like I'm having to put on my tolerance hat to deal with other folks' PMS days. I'm not the one who starting calling others' ideas absurd, and I do find it somewhat insulting that I need to keep explaining the same thing using different terminology to folks who refuse to take the time to read it correctly in the first case. I think I've been more than cordial considering the circumstances.

You are now talking about the APR. I didn't say the APR, I said the "effective" APR. That is not even a mainstream financial term, it is a term I coined for this discussion in order to illustrate a point.

If you sign up for a 30 year fixed mortgage at 4% on $250k, the total interest paid in the original terms of the note is $179,673.77 or about 71% of the loan amount in interest.

If you pay off that same mortgage in 10 years by adding another $1300 to your monthly payment, the total interest paid is $54,790.31 or about 21% of the loan amount in interest.

Divvy those up on total number of years and let us know which scenario leaves you paying a lower percent of the total loan amount per year.

Ok, I have read your posts, and then read them a second time. I'm relieved to hear you say that "effective APR" is not a mainstream term, because it is not one that I am familiar with.

I am still struggling to understand what precisely you mean by this term. For starters, APR stands for

**A**nnual

**P**ercentage

**R**ate. It is the rate that you pay on an annual basis.

Certainly, if you pay off a loan in 10 years you pay less in total interest. By extension you pay less overall, because the principle does not change.

But your

**Annual** rate does not change. In your example, you are giving the percentage of interest on total amount paid. I agree, it is a lower amount. You would get the same result taking out a 10 year mortgage and paying the minimum, or taking out a 15 or 50 year mortgage and paying those off in 10 years.

If i may be so bold, I'm afraid that you are being tempted by the siren's call of lowering the total interest amount paid on a large loan. Certainly, when you look at paying down a 30 year note in 10 years, and you run it through a mortgage calculator it's easy to say "wow! I'll save $50k in interest on every $100k borrowed! That's a crap-ton of money!" And that would be true. But it is interest paid off over a 30 year period, and you are paying the exact same rate in interest every year, and the principle is not indexed to inflation. If I believe that my excess money invested would earn more than the 4% - inflation over 10 years, then it makes sense for me to invest it regardless of the term of my mortgage. If I could stretch it to a 60 year mortgage, I would. (note, after 60 years the value of $100k at 2% inflation would be just $29k. The power of inflation!)

OTOH, if it makes sense to you to pay off your mortgage earlier because you are not confident that investments will not have better returns, then it makes sense to pay it down as quickly as possible. This is a valid point too, and there have been 15 year historical periods when the market HAS returned less than 4%.

Regardless, theh Annual Percentage RATE never changes, regardless of whether it is actual, effective, imaginary or chocolate.