What is a Mortgage Payoff Calculator?
Free yourself from your mortgage debt faster by making extra payments on your loan. Position yourself better financially by saving thousands of dollars that would otherwise be paid in interest over the life of your loan. Use a mortgage payoff calculator to estimate how making extra payments will affect your amortization schedule. Trust that you’re in good hands with The Home Loan Expert—our goal is to help you feel financially confident by providing you with tools to help you calculate your mortgage payoff.
What Information do I Need to Calculate My Early Mortgage Payoff?
Fill in the inputs below on our mortgage payment calculator to see how you can save thousands of dollars by paying off your loan early. Once you have punched in the numbers, you will be able to view your newly amortized schedule. This will allow you to begin budgeting on how to incorporate increased payments into your monthly or yearly payments.
- Years remaining on your loan. Dust off your old mortgage loan records, for this input you’ll need to enter the total number of years remaining on your loan.
- Your original mortgage term. Enter the number of years allotted to repay your loan. In most cases, mortgage loans are issued in increments of 15 or 30-year terms. Most loan terms usually measure how long it would take to pay off your loan by only making minimum payments.
- Your original mortgage amount. For this field, enter the total for the original amount used to finance your mortgage. Make sure you don’t confuse this with the balance for the remaining principal on your loan (which should be less). Make sure you calculate how your down payment affected your original loan amount. If you put 3.5% down on a $350,000 home, your original loan amount would be $337,750.
- Extra payment. You can make extra payments monthly, yearly, or as a lump-sum payment.
- Annual interest rate. This is the simple interest rate negotiated on your loan. For a fixed-interest loan, this input remains constant over the life of your loan. If you have an adjustable-rate mortgage (ARM) loan, your rate will vary depending on if it is in the initial period or variance period. Be aware that your annual interest rate does not measure other fees included in your loan like mortgage insurance, origination fees, discount points, and other expenses paid when your mortgage first originated. You can use an annual percentage rate (APR) calculator to see how that total will affect your monthly payments. APR affects your loan’s amortization fee, so it’s a good figure to be aware of.
How Can I Choose an Extra Payment Plan that Works for Me?
The best way to make extra payments will be unique to each homeowner’s financial situation. Here are some suggested ways:
- In a lump-sum extra payment. This option is great if you have a surplus of income on hand from a bonus, business or investment dividends, an inheritance, or another sizable chunk of cash to put towards paying off your loan. A one-time lump-sum payment is a nice option for homeowners who may not be able to fiscally commit to regular extra payments but still want to take a bite out of their loan. Make sure you check for any prepayment penalty fees.
- With biweekly mortgage payments. You can shorten the life of your loan with biweekly payments building in a 13th monthly payment. Biweekly payments work by having you pay your monthly payment every fortnight. You can use a biweekly mortgage calculator to see how this will affect your monthly payments and amortization schedule.
- By paying more than your minimum monthly payment. You know you want to make extra payments, but you’re not sure how much you can commit to on a regular basis. You can offer yourself some flexibility by making extra payments each month a la carte or setting a goal for the amount you would like to consistently pay extra each month. Increasing your minimum monthly payment each month can still shorten the life of your loan with significant savings. You can adjust the extra payment amount on the calculator to determine how different extra payment amounts will affect your loan’s amortization schedule.
What are Prepayment Penalties?
Paying off all or part of your mortgage early could result in a prepayment penalty depending on your lender. Prepayment penalties incentivize borrowers to pay back the principal on their loan slowly for the full negotiated term. This allows lenders to collect interest on your loan. Not all extra prepayments are penalized, so it is important to discuss your plan to make extra payments with your lender, especially if you are planning to do it in a hefty lump-sum amount.
For example, a large lump-sum extra payment may incur an extra fee of $500. Smaller extra payments will still allow your lender to receive a certain percentage of interest, which is less likely to be penalized. You will need to do some calculations to determine the cost-benefit analysis of whether biting the bullet on a penalty fee can still save you thousands of dollars otherwise spent in interest over the life of your loan.
There’s also the opportunity to tap into your home’s built-in equity sooner by paying off your loan earlier.
How Can The Home Loan Expert Help?
Since its inception, The Home Loan Expert’s goal has been to help homeowners position themselves better financially by getting them the best deal on a loan. A mortgage payoff calculator is a great place to start when getting an estimate on how much you can save by paying off your mortgage early. Speaking with a knowledgeable lending Expert can give you a more certain idea of what the process entails with a more detailed figure.
Our team of friendly lending Experts comes from the same communities we serve. We are able to relate to our clients and create a tailored lending experience that meets their mortgage budgeting needs. Our in-house underwriting process makes the loan approval process painless and efficient — with closing times in as little as two weeks.So give us a call at 866-221-1913 to find out more about how you can save thousands by paying off your mortgage sooner. We can also be reached through our online chat service to help you find more about how you can put yourself on the pathway to better financial freedom with extra mortgage payments.