ROI on mortgage pay down?

[Matt Williams]

I just completed a BRRR, and in looking at the amortization schedule I noticed how little principal is paid in the first years. I was going to invest 10k in A RE Debt fund. However, I am now thinking a better return would be to jumpstart the mortgage paydown with that 10k. So here are my numbers, and maybe you can help me see if I am making a mistake in my thinking....

198k loan, 358 payments left 7.5% interest.  My monthly payment is 1390.00. When I put in chat GPT how much I would save with a 10k principal payment, it said 83k saved on interest, and 6 years.  However, when I put in Dave Ramsey calculator, It said 66k saved, and 4yr 7 mo save.  So first, which is correct?  

I figured if I save 82.8k with a 10k investment, that is a 828% ROI, divided by 24 years remaining on the loan, and that provides a 34.5% annual ROI. Now, obviously I need to wait 24 year to realize those gains. But that seems like a prudent investment. Am I looking at this wrong? I know there is a lot of opinions out there about whether to leverage, or pay off properties. I am not necessarily wanting to open that can of worms, but it seems a principal payment at the BEGINNING of a mortgage yields a huge benefit that cannot be matched say 10 year down the road.

[Josh Lewer]

@Matt Williams Good question. It really depends on your goal. If your focus is debt reduction which I would lean toward then I’d look at it more as a guaranteed 7.5% return, which is the interest rate on your mortgage.