Definitions
Wealth = House Value − Selling Costs − Debt + Investments
The basics
- Scenario
- One complete setup to compare: a loan plus your assumptions about the house, expenses, and your investments.
- Horizon
- The month everything is evaluated at, set with the slider. Most people sell or refinance long before a loan ends.
Wealth and its parts
Wealth is what you would have if you sold everything today. Each term below is one piece of the formula above.
- House value
- The home price grown (or shrunk) each month at your appreciation rate.
- Selling costs
- Agent commissions and closing costs when you sell, as a percent of the house value. Selling the house is part of "selling everything", so the house always counts net of these costs.
- Debt
- What you still owe on the mortgage, computed to the penny. It shrinks with every payment.
- Investment
- Money invested outside the house. It starts at the scenario's starting amount, grows each month at the investment return, and receives the monthly amount you add.
- Invest payment after payoff
- A per-scenario option. When on, once the loan is paid off, the monthly payment (plus any extra) that had been going to the bank goes into the investment.
- Total wealth
- The whole formula: house value minus selling costs minus debt plus investment.
Money that leaves the system
Every dollar you spend either becomes wealth (principal, down payment, investment contributions) or leaves for good. Costs track the second kind; costs never subtract from wealth, they are simply gone.
- Expenses
- The recurring part of costs: money paid to keep things going. Property tax (charged as 1/12 of the annual rate on that month's house value, so it grows with the house) plus monthly fees such as insurance, HOA, maintenance, or rent.
- Costs
- Everything that leaves the system: closing costs, interest, mortgage insurance, and expenses. Expenses are one part of costs; interest and mortgage insurance are the loan's own costs.
Loan features
- PMI / FHA MIP
- Mortgage insurance. PMI ends automatically when the scheduled balance reaches 78% of the original home value; FHA MIP can last the life of the loan.
- ARM
- Adjustable-rate mortgage: the rate is fixed for an initial period, then adjusts toward your expected index + margin within per-adjustment and lifetime caps.
- Interest-only period
- Months during which payments cover only interest; afterwards the payment recasts to pay off the balance over the remaining term.
Debt over time
Total wealth over time
House value − selling costs − debt + investment: what selling everything would leave you with, month by month. Each scenario's investment is exactly what you set in its editor: a starting amount plus a monthly amount, growing at its annual return.
Scenario breakdown
The three parts of one scenario's wealth: house value (net of selling costs), investment, and debt (owed, so it subtracts), plus their total.
Summary
Payment composition
Amortization schedules
Loan calculator
Debt over time
Amortization schedule
Extra payments vs. investing
Prepaying returns your mortgage rate, guaranteed. Investing might return more. Both paths spend the same money each month while their loans run; once a path pays off its loan (either path), the after-payoff amount you choose goes into the investment each month.
Balance = Investments − Debt
The house is left out: it is the same on both paths, so it cannot change which one is better. The last column, Invest − Prepay, subtracts the prepay balance from the invest balance at your horizon. Positive means investing leaves you ahead; negative means prepaying does.
Each line tracks one path's balance (investments minus debt), month by month, at your extra amount. Lines start negative while the debt still exceeds the investment. The prepay line owes less; the invest line owns more; after each line's payoff marker, that path invests the after-payoff amount every month.