You’re Paying HOW MUCH in Interest?! Here’s What You’re Missing.

I get it—seeing how much interest you’re paying over time can feel like a punch to the gut. 

One of my clients experienced that recently. While reviewing their mortgage loan estimate, they realized they have spent over $150,000 in interest in seven years. Their response? “Holy sh*t! That’s a lot of money!" 

And they are not wrong—it is a lot of money. That’s why it’s important to understand what interest is, and why it exists.  

So, let’s break it down for you. 

Why Borrowing Money Isn’t Free 

Isn’t it nice when your bank pays you interest on the money you deposit? That’s because you’re allowing them to hold and use your money. In return, they give you a small percentage back. 

On the flip side, when a bank lends you money—whether for a mortgage, a car, or anything else— they are letting you use their cash. And just as you get something in return for lending your money to your bank, your lender expects something as well.  

If you loaned someone $500,000 and they promised to pay you back over 30 years, would you do it for free? Probably not. 

Because while that money is out of your hands, you: 

• Lose the ability to spend it elsewhere 

• Miss out on earning returns by investing it 

• Take on the risk that they might not pay you back 

In return for tying up their cash for decades, lenders charge interest. That’s the cost of borrowing money—it’s really that simple. 

Why Does It Feel Like You’re Paying So Much? 

Do you ever feel like you're barely making a dent in your loan balance? That’s because in the early years of a mortgage, a bigger chunk of your payment goes toward interest, not the principal. Here’s why: 

Your monthly payment is based on how much you still owe—the higher the balance, the more interest charged to it. Since your loan is highest at the beginning, interest eats up most of the payment. 

But as you pay down the loan, the balance shrinks. And because interest is charged on what’s left, over time, less of your payment goes toward interest and more goes toward actually paying back the money you borrowed. 

This is called amortization, which is just a fancy way of saying the bank gets paid first. 

The longer you hold it, the more the balance drops, and the more your payment goes toward building equity. 

Don’t Ignore the Real Villain 

People get caught up in how much interest they’ll pay on a mortgage—but here’s the thing: that money is going toward something you’ll likely own one day. A house is an asset. Over time, it tends to grow in value. 

One area where people don’t stress over interest enough? Credit cards. 

People will freak out about paying 6% on a mortgage but think nothing of swiping a credit card at 24% interest on something that loses value the second they buy it—clothes, electronics, a vacation. That money is gone the moment they spend it. 

And here’s what makes it worse: they’ll carry a balance for months, maybe even years, and pay much more in interest than they ever needed to. 

Interest is an expense. You’re getting charged for borrowing money. 

The difference? A house gives you something back. A credit card? Not so much. 

If you’re going to stress over interest, at least stress less about the one tied to something you’ll own one day. 

Banks Are Not Getting Rich Off Your Loan 

Many people assume banks make a fortune off their mortgage. But when you  breakyou break it down, the numbers tell a different story. 

Banks get a return on their investment, but if they were looking for the biggest return, they wouldn’t be lending it out for long-term mortgages at 6% interest. They could put it into other investments and probably make more. 

And on top of that, banks don’t hold onto most of the loans they give out. They sell them to investors, move the money around, and keep the system going so more people can borrow. That’s how the entire economy functions—without lending, buying homes, starting businesses, or expanding industries would be nearly impossible for most people. 

So yeah, banks make money. But getting a mortgage isn’t some get-rich-quick scheme for them. It’s just the cost of borrowing—the same way you’d expect a return if you were the one lending out the cash. 

Interest Isn’t Free—But That’s Not the Whole Story 

Money isn’t free. It has value. And when someone lends it—whether it’s you or a bank—they need something in return. That’s interest. 

Before you start thinking, I’ll just throw extra money at my loan to pay less interest!"—pump the brakes. Saving on interest sounds great, but locking up too much money in your home can create other problems. 

Once that cash is in your house, the only way to get it back is to sell the property or borrow against it. If an emergency hits, you don’t want to be house-rich and cash-poor. 

Plus, if your mortgage is at 6% interest, but you could invest that same money and earn 8-10%, does it really make sense to rush to pay off the loan? Not always. 

It’s not just about “saving on interest.” It’s about balancing liquidity, opportunity, and long-term wealth. 

At the end of the day, the smartest move isn’t always the most obvious one. Weigh your options, know the tradeoffs, and play the game to win—not just to finish. 

Still have questions? I've got the answers. Let’s talk.