Line Of Credit Payoff Calculator

closing day on a home

Line of Credit Payoff Calculator

Did you know that homeowners with enough built-in equity have the option to refinance themselves into a better position with a home equity line of credit (HELOC)? Different variables included in your HELOC will affect your monthly payments. The Home Loan Expert is here to show you use a HELOC mortgage calculator to:

  • Determine how much interest you’ll pay over the life of your line of credit.
  • Estimate how much your recurring payments will be over the life of your loan.
  • See how much you could save in interest by paying off your line of credit faster.
  • Understand how different interest rates will affect your scheduled payments.

What is a Home Equity Line of Credit? 

With a HELOC, the built-in equity from your home is leveraged as collateral to open a line of credit. It is also known as a second mortgage. HELOCs are useful for people who want flexibility financing larger consumer projects over a negotiated period of time ranging from 5-10 years. You can use a HELOC for home renovations, paying down student debt, college tuition, weddings, medical bills, paying off consumer debts, starting up a small business, or pursuing other wealth-building opportunities. Your HELOC is calculated based on the percentage of your home’s appraised value minus what you still owe on your first mortgage.

HELOCs are revolving loans. This means you can borrow against it and pay it off continuously throughout the draw period. Once the draw period ends, you enter into the repayment period. That’s where a HELOC extra payment calculator comes in handy. Most of your HELOC’s monthly payments will be determined by the principal and interest on your loan. This is especially helpful since HELOCs have variable interest rates that fluctuate in alignment with market trends throughout the life of your loan.

What Inputs are Needed for My HELOC Payoff Calculator?

There are several items you’ll need to input into your HELOC mortgage calculator. Be prepared to provide information on the following entry fields to get an estimate of your total monthly payments:

  • Current Balance on your HELOC. This is the amount you currently owe on your HELOC. 
  • Annual Percentage Rate on your HELOC. This is the negotiated interest rate on your loan. It will likely be reset by your lender annually or semi-annually.
  • Rate Chance per Year.  Fill in this entry field to indicate how much you expect the interest to change in the next year. For decreasing rates, enter negative numbers.
  • HELOC Payoff Goal. Enter the number of months in which you want to pay off your HELOC.
  • Current Monthly Payment. This does not have to be the minimum balance. Include the total amount you pay each month towards your HELOC. More aggressive payments will require greater financial bandwidth, but can also save you thousands of dollars otherwise spent in interest over the life of your loan. You can adjust this figure to see how extra payments would affect your payoff schedule.
  • Additional Monthly Charges. If you are still in the draw phase of your HELOC, enter in how much you think you’ll take out with your HELOC each month. Note that this will affect your repayment schedule by lengthening the repayment period or requiring larger monthly payments to pay off your HELOC sooner. Use the “future draws” feature to itemize how much you plan to take out with each withdrawal under your HELOC.
  • Annual Fee. If you pay an annual fee to keep your HELOC open, enter the amount here.

You can adjust the inputs above to see how different rates and terms will affect your monthly payments. 

What Does the HELOC Payoff Process Entail?

During the draw period, you are only required to pay the interest on your HELOC. Once you enter the repayment period, you will be required to pay the principal and interest on your loan. The amount you are required to pay each month will primarily depend on your principal’s outstanding balance, interest rate, and the negotiated term. 

Be aware of large balloon payments that could be due at the end of your loan. Balloon payments allow borrowers to reduce that fixed payment amount in exchange for making a larger payment at the end of the loan’s term. Most homeowners with balloon payments intend to sell their homes before the payment is due. In a down market, this could present a problem as a seller. 

Be mindful of your budgeting bandwidth. Because your home is used as collateral on a HELOC, defaulting on your loan could have dire consequences like going into foreclosure. This will also significantly lower your credit score. After getting your home appraised for its equity value to see how much you can take out with your HELOC, it’s a good idea to make a list of expenses or projects you think you would apply your line of credit to. You can always ask your neighborhood lender to walk you through the process of budgeting for a HELOC that meets your needs. 

How Can The Home Loan Expert Help?

From the get-go, The Home Loan Expert’s mission has been to help our neighbors put themselves in a better position financially by getting them the best deal on their loans. This includes knowing how to effectively plan for their loan payoff schedule. 

A home equity loan payoff calculator is a great starting point when you want to calculate how long it will take you to pay off your HELOC. It can also show you much you can save by shortening the amount of interest paid on your loan by shortening the life on your loan. Our knowledgeable team of friendly lending Experts can help answer any outstanding questions you may have about which variables will affect your HELOC loan’s payoff schedule. 

The Home Loan Expert’s lending team provides clients with a local vision with nationwide expertise. We are familiar with our clients’ needs because our team members are drawn from the same communities we serve. Our streamlined underwriting process takes place in-house, making us able to close on your loan in as little as two weeks.

Let us help you today by calling one of our lending Experts at 800-991-6494 to see what’s possible when it comes to paying off your line of credit. We can also be reached through our application to find out how you can start to draft a financial plan of action to pay off your HELOC. 


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