There are two main benefits of paying a mortgage early – less interest paid and more home equity faster.īut paying off the mortgage is not necessarily always the best choice if you have more expensive debt, like outstanding credit card balances. While most people tend to be alarmed by the amount of interest they pay the bank over 30 years, it’s equally shocking how much you can save simply by paying a little extra. ![]() The list goes on and the savings may shock you. The result is a home that is free and clear much faster, and tremendous savings that can rarely be beat. To be more precise, it’d shave nearly 12 and a half years off the loan term. Paying an extra $1,000 per month would save a homeowner a staggering $320,000 in interest and nearly cut the mortgage term in half. Or consider a $600,000 loan amount set at 6% for 30 years. If you had a $300,000 loan amount set at 4.5% on a 30-year fixed, paying an extra $250 per month would save you almost $70,000 and you’d pay off your loan seven years and six months ahead of schedule. If you had a $400,000 loan amount set at 4% on a 30-year fixed, paying an extra $100 per month would save you nearly $30,000 and you’d pay off your loan two years and eight months early. If you paid an extra $500 per month, you’d save around $153,000 over the full loan term and it would result in a full payoff after about 21 years and three months. Imagine a $500,000 mortgage with a 30-year fixed interest rate of 5%. Once you click compute, you’ll see how much the extra mortgage payments will save in the way of interest over the life of the loan, and also how much faster you’ll pay off your mortgage. If you want to make a lump sum extra payment of $1,000, enter it and change the “Monthly” to “One Time” for an accurate calculation. Then input the additional payment amount and whether it’ll be a monthly, annual, or one-time extra payment.įor example, if you plan to pay an extra $100 per month, you shouldn’t have to change anything with the default settings. Next, enter the mortgage rate and the date you plan to make the extra (or larger) payment. It will depend on the mortgage rate and the loan balance. Of course, that’s just a ballpark estimate. So if you’re currently paying $1,000 per month in principal and interest payments, you’d have to pay roughly $1,500 per month to cut your loan term in half. To make extra payments based on your financial goalsįor example, if you’re interested in paying off your mortgage off in 15 years as opposed to 30, you generally need a monthly payment that is 1.5X your typical mortgage payment.Knowing the actual numbers can help you determine if it makes sense.Of paying off your home loan ahead of schedule. ![]() This calculator will illustrate the potential savings.Use the Early Mortgage Payoff Calculator to Determine the Actual Savings You input your original mortgage amount and can quickly see what paying extra will do in terms of both interest savings and shaving years off your mortgage. Put simply, it’s a standard mortgage calculator with extra payments built-in, so it’s really easy to use. ![]() Do not rely upon the information provided in this content when making decisions regarding financial or legal matters without first consulting with a qualified, licensed professional.If you own real estate and are considering making extra mortgage payments, the “early mortgage payoff calculator” below could be helpful in determining how much you’ll need to pay and when to meet a certain financial goal. Banzai and its sponsoring partners expressly disclaim any liability arising from the use or misuse of these materials and, by visiting this site, you agree to release Banzai and its sponsoring partners from any such liability. Neither Banzai nor its sponsoring partners make any warranties or representations as to the accuracy, applicability, completeness, or suitability for any particular purpose of the information contained herein. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. ![]() Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. While we hope you find this content useful, it is only intended to serve as a starting point.
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