Regarding Don Campbell's answer in Mortgage Q&A "Extra Loan Payments Bring More Profit" (July 15), there is a difference between equity and profit .
If you buy your house for $75,000, pay $25,000 cash down and borrow $50,000 at 10% for 30 years secured by a mortgage or deed of trust, and I buy a similar house for $75,000 and pay all cash, you have $25,000 "equity and I have $75,000 equity."
Assume that we both sell at the same time for the same price, i.e. $100,000 and we ignore seller's customary closing costs, your profit is $25,000 and my profit is $25,000, notwithstanding the fact that you will receive only $50,000 cash (your equity of $25,000 plus your profit of $25,000), and I will receive $100,000 cash (my equity of $75,000 plus my profit of $25,000).
If you accelerate the payments on your loan, and reduce the balance owing faster than required, it will not result in an increase in the profit realized but it will increase your equity, and thereby increase the amount of cash you receive upon a sale of the property.