Why are mortgages amortized such that the interest is front loaded?
In the first few years of a 30 year mortgage, the real interest rate is 300% or so based on principal and interest payments. Example…on a 30 yr loan of $ 100,000 at 6.5%, in the first year about $ 1100 goes to principal and $ 6400 to interest. Why are mortgages not simple interest loans? Why do we, as consumers, seem to accept this?
$ 1100 x 300% = $ 3300
But $ 6400 is the interest amount. Ok, so my 300% number is incorrect.