<prompt> Human: Hello, I just got a front-loaded 30 year mortgage and plan on keeping the house. Because its front-loaded, most of my early payments go towards interest, and as the years go on, the scale slides and I pay more principal each month.It seems to me, but I cant figure it out mathematically, that paying extra payments towards principal early on in the life of the loan are more valuable than the later extra payments because the bank wont be able to charge interest on the paid down principal over all those years. I havent found a calculator or article saying that if you were planning on paying down early, that a dollar paid on your first mortgage payment saves X dollars down the line vs a dollar paid on your 100th payment. Am I mistaken?Assistant: This is sort of a common misconception. There is no front-loading as such. You pay the same amount of interest per unit time per dollar of principal over the life of the loan. Early payments have more interest because the principal is higher.If you pay down a loan sooner, then you have a lower principal balance for longer and thus pay less interest. But you also had to spend the money sooner, so that increased the opportunity cost of making those payments to the mortgage vs. something else.Human: Ok, Im a little dense, so heres the part Im not quite getting:You pay the same amount of interest per unit time per dollar of principal over the life of the loanOk, say Ive got a 100k loan. If I pay 10k on my first payment not a down payment, then, even though I only owe 90k, the bank will still figure my interest owed based on the original loan amount 100k for the life of the loan until its completely paid off? Therefore, it wouldnt have mattered if I paid the 10K now or when I have a 10k balance left?If thats true, the bank would probably not reduce your monthly interest payment to reflect the lower balance-unless you refinance. Ok, I think Im getting it. Does this all seem right?Assistant: the bank will still figure my interest owed based on the original loan amount 100k for the life of the loan until its completely paid off? No, thats not how it works. You interest is recalculated each month on the outstanding principal. Your payment doesnt change, but the amount that goes to interest changes. If you pay down the principal, your interest charge will decrease, and more of your payment will go to principal for all remaining payments, until you eventually repay the loan sooner than scheduled initially. You can have the bank recast the payments to a lower minimum monthly payment if you significantly reduce the outstanding principal, without refinancing and perhaps having to take a higher interest rate.Human: Ok, then, I think you can save more if you front load your extra principal payments early then-its just a matter of figuring out if the opportunity cost is worth it. Is that a correct statement?If so, I just would like to figure out a way to see what a dollar extra paid in the first month is worth compared to a dollar paid in any other month.  <response>: Paying extra on a loan is always worth the interest rate on the loan, regardless of when you pay it.That is why if you have a relatively low interest rate, you may be able to get better returns by investing the money instead of paying extra.The question is always Where is my next dollar best applied NOW. 