<prompt> Human: Hello,I am looking at a purchase that is roughly 1,250,000. A 20 down payment would get me to a loan amount of 1,000,000. I am being offered an interest rate of 4.375.This creates a rough monthly payment of 5,000. I do have extra cash in hand, and could pay down the loan amount to 800,000, producing a monthly payment of 4,000.Saving 12,000year for 200,000 is a 6 return. To me, it sounds pretty good, but it doesnt factor in opportunity costs investmentsstock market returns over 6. Am I evaluating this correctly? I will file jointly married and will touch some of the federal 32 bracket. I dont think decision impacts California state taxes?  <response>: Calling your lower monthly payment a savings does not really fit. You could have a 1,000 lower payment by extending the term of the loan, that doesnt make it savings and would actually cost you more in the long run.By paying 1 more you save at 4.375, the interest rate on your loan, whether you pay 1 or 100 or 100,000 more down that is what you are getting.What you will save in the long run if you want to compare totals paid is the different in total interest paid between financing 1m for 30 years at 4.375 and financing 800k for 30 years at 4.375.You will effectively save roughly 160,000 in total interest paid by putting down another 200,000, bringing the total amount you will have paid for the home down by quite a lot assuming you otherwise pay the amortization exactly as scheduled - thats still not the return though - its still 4.375. 