Mortgage Payoff Calculator
The Mortgage Payoff Calculator is used to determine your current mortgage payoff schedule based on a fixed interest. You can choose to pay off your loan altogether, and see the costs, or view the effects of an additional monthly payment. This calculator can also give out the interest saved and the new loan schedule.
As the Mortgage Payoff Calculator, and the accompanying Amortization Table show, each payment that you make on your mortgage has two elements: Interest and Principal. Mortgages are set up so that you start out by paying a lot of interest, and only a little principal. It's only when you get to the last years of repayment that you start cutting heavily into the principal.
This is why even small extra amounts added to your monthly payment would make a difference. Even five-six dollars added to the monthly mortgage payment cut into the principal. Sure, it's only a few bucks, but it's a few bucks each month where it matters, because the next interest payments will be reduced, even if only a small amount. That brings you closer to reducing the principal altogether.
How much does it matter? Suppose you have a payment for $644? Why not just round it up to $650? An extra $6 a month on a $200,000, 30-year loan can save you four payments at the end of the mortgage – try it out on the calculator and see!
The calculator can also help you to work out the contingencies of refinancing. With a 30-year, $100,000 loan at 5 percent, your principal and interest payments are $537. At the same rate, but on a 15-year payoff schedule, your principal and interest payments are $791. That's $254 more a month, but you'll own your home in a much shorter time, and pay less interest. Of course, you could also try to refinance for 30 years at a lower rate of interest, and that will cut down on your payments.
But always remember: So long as you have financial flexibility, you have control, and not the bank. You can pay off your 30-year mortgage faster, and get the benefits of refinancing without going through the hassles or paying the extra costs. Still another way of paying off the mortgage earlier: It's now possible to set up biweekly payments at most banks. Biweekly payments take advantage of the fact that there are 52 weeks in the year and 12 months. If you pay half your regular mortgage payment every other week, you'll have made 26 half-payments, or the equivalent of 13 full monthly payments, at year's end. You may have to do some negotiating with your bank about biweekly payments: Some banks try to charge extra for them, but you can probably negotiate a deal. Many will just accept them for free however, although some will reserve crediting the extra payments until the end of the year.