The economics of
a quiet house.
A tight, all-electric house costs roughly one hundred and twenty dollars a month to run. A typical comparable house in this climate costs roughly two hundred and eighty. The arithmetic is straightforward. The compounded result, over a twenty-five-year mortgage, is not.
Two questions, asked in sequence. First: what does it cost to heat, cool, and power this house, versus the alternative? Second: what happens if the difference is redirected — every month, automatically — against the principal of a twenty-five-year mortgage?
Energy, over twenty-five years.
The same dollars, redirected.
A $400,000 mortgage at 6.5 % APR over twenty-five years has a base monthly principal-and-interest payment of $2,701, and ultimately costs $410,200 in interest. Each column below shows what happens when an additional sum is paid against principal every month — the energy money, simply not spent on energy.
| Base | +$100 | +$150 | +$160 | |
|---|---|---|---|---|
| Total interest paid | $410,200 | $370,900 | $353,500 | $350,400 |
| Interest saved | — | −$39,300 | −$56,800 | −$59,800 |
| Years to payoff | 25.0 | 22.9 | 22.0 | 21.9 |
| Years saved | — | 2.1 | 3.0 | 3.1 |
The +$160 column reflects the energy differential of this house. Calculations are exact within rounding; interest figures rounded to the nearest hundred dollars.
Total interest paid, by scenario.
The leverage.
in mortgage interest avoided · over 25 years
More than the $48,000 of energy money it took to get there. The interest you don't pay is bigger than the energy you don't spend.
Modeled on a $400,000 mortgage at 6.5 % APR over 25 years. The $48k energy figure is independent of loan size; interest avoided scales with the loan — a smaller mortgage saves less in interest, a larger one saves more. Real-world results are likely better than shown: energy prices are assumed flat for 25 years, which is conservative, and Ohio's deregulated electricity market lets the all-electric figure drop further, often below $100/mo.
A tight envelope is a quiet form of compound interest.
Same square footage. Same address. Same school district. The variable is what you don't pay each month — and what that, redirected, becomes by year twenty-five.