A $400,000 mortgage at 8% barely moves after 10 years

Buying a house at 8% mortgage rates means you can spend more than $350,000 over the first 10 years and still owe about $351,000.

Take a $400,000 30-year fixed mortgage at 8%.

The monthly principal and interest payment is $2,935.

After 10 years, you have made 120 payments totaling about $352,207.

Your remaining mortgage balance?

About $350,899.

So after handing the bank more than $352,000, you have reduced the original $400,000 debt by only about $49,100.

And that $2,935 isn’t your actual monthly cost of owning the house.

Add property taxes.

Add homeowners insurance.

Add maintenance.

Add repairs.

Add the occasional $10,000 problem that seems to appear at exactly the wrong time.

The mortgage alone produces another ugly number.

Over 30 years, you would make about $1.057 million in principal and interest payments on that original $400,000 loan.

That’s roughly $657,000 in interest.

This is why the price of the house is only part of the housing affordability problem.

The financing can completely change the economics.

At 3%, the payment on the same $400,000 loan would be about $1,686 a month.

At 8%, it is $2,935.

Same house.

Same $400,000 borrowed.

Completely different monthly burden.

And there is another reason this matters.

High rates don’t just make houses harder to buy. They make it harder to build them.

Developers face higher financing costs. Buyers can afford less house. Existing homeowners with cheap mortgages have less incentive to move. Builders have to deal with a smaller pool of buyers who can qualify for new homes.

So the market gets trapped between expensive houses and expensive money.

The homeowner is paying more.

The buyer is qualifying for less.

The builder is financing projects at higher rates.

And after 10 years of mortgage payments, the borrower can still be carrying almost 88% of the original loan.

That is what an 8% mortgage does to the first decade of a 30-year loan.

The house may be appreciating.

The paycheck may be rising.

But the bank still owns a very large piece of the debt.

Wild is one word for it.

Not financial advice.