There would not be any compounding because the amount of the note is continually decreasing.
Take 100,000 at 10% and you have 300,000 dollars after 30 years if you pay the full interest rate for every year. However, the payments keep decreasing the principal until after the 30 years the entire sum is paid. So I just divide the interest in half for the full time because theoretically by the mid point of the loan you are only paying 1/2 the interest you were in the beginning of the loan.
My math is wrong for some reason. I just went on the internet and quickly located the first free loan calculator available. It appears you would pay about 315,000 for the house over 30 years with 215,000 of that being interest. Anyone stupid enough to do this deserves what they get. Within 5 years of the loan origination almost anyone would be able to refinance with a good payment history, by 7 years nothing should remain of previous credit issues.
You will pay mortgage insurance if you put down less than 20% downpayment on a house but you can get deals that had ridiculous initial payments, sometimes like 2% of the value of the loan and even some without an initial payment.
There ya go, those numbers are better!
Even at a good interest rate, a 30 year note usually ends up being double the purchase price when interest is factored in. 10% on a home is a suckers game, or a high risk investor looking for a quick flip. 13 payments a year drops a 30 year note something like 6-7 years. But people dont do that, they get 2nd and 3rd mortgages on their homes instead. derp derp derp
The lack of thought that was put into such a huge fork in the road in these peoples lives is baffling to say the least. No one tricked them, those contracts were in plain English. Like a new car and a 7-8 year loan, they just wanted it so bad they didn't give a fuck.
I can't even remember the amount of people I heard getting 105%+ financing. I watched a friend lose it all after his dry walling business tanked after the crash. Was there drinking with him as we watched them cart away all that furniture, pair of jet skis and some other bullshit he should have cash flowed. I literally had to bring camping chairs for us to sit on as the place was cleaned out and he was sleeping in his camper which was taken away later that year as well. He just thought the bubble would last 10 more years and he had plenty of time to pay it all down. That was 6 years ago, and he hasn't bounced back, not even close.