Mortgage Payoff Calculator
Who doesn’t like to save money? Better yet, who doesn’t like to save a ton of money.
Saving thousands of dollars that would otherwise be paid in interest over the life of your loan is like hitting the mortgage loan jackpot. You can put yourself in a better financial position by making more aggressive monthly payments to pay off your mortgage loan earlier.
The ability to budget for this type of financial plan of action will be unique to each homeowner’s financial situation, but Hero Loan is here to guide you on how to use a mortgage payoff calculator to estimate how quickly you can pay off your home.
What Inputs are Needed for a Mortgage Payoff Calculator?
Fill in the entry fields below for the mortgage payment calculator to show how you can save thousands of dollars with an early payoff on your loan. Your new amortized schedule will highlight the financial bandwidth needed to make this opportunity possible.
- Years Remaining. Enter the total number of years remaining on your mortgage loan. You will need to know your original mortgage loan to calculate this number.
- Original Mortgage Term. Enter the negotiated term over which you agreed to repay your loan. Mortgage terms are usually issued at intervals of 15 or 30 years. Keep in mind that loan terms typically measure how long it would take to pay off your loan if you only make minimum payments.
- Original Mortgage Amount. Enter the total for the original amount used to finance your mortgage. The remaining balance on your principal should be a different figure. If you put 5% down on a $350,000 home, your original loan amount would be $332,500.
- Extra Payment. Enter the extra amount that you plan to pay toward your loan’s principal each month, every year, or in a one-time payment.
- Annual Interest Rate. Enter the simple interest rate negotiated in your mortgage loan. On fixed-interest loans, this input remains unchanged throughout the life of your loan. For adjustable-rate mortgage (ARM) loans, your rate will vary depending on if it is in the initial period or variance period. Take caution that your annual percentage rate (APR) is not measured with this calculator. APR rates tend to be higher as they include other expenses such as mortgage insurance, and the origination fee and or discount point(s), These expenses were paid when the mortgage first originated.
What Are Some Ways I Can Make Extra Payments?
There are a few ways in which you can make extra payments to pay off your mortgage more quickly. These include:
- Lump-sum Extra Payment. Maybe you get an end-of-the-year bonus, dividends from investments or a small business come into fruition, or are given some money by a family member. Whatever the source, you can make a one-time lump-sum payment to pay off your mortgage sooner. Just be sure to check if there are any prepayment penalty fees.
- Biweekly Mortgage Payments. Biweekly mortgage payments shorten the life of your loan by creating a built-in 13th monthly payment. Instead of one monthly payment on your mortgage, you will make one payment every two weeks. You can use a biweekly mortgage calculator to see how this will affect your monthly payments and amortization schedule.
- Paying More than Your Minimum Monthly Payment. Managing your monthly payments responsibly also means being realistic about how much extra you can comfortably afford to put towards your mortgage each month. Paying more than your minimum monthly payment by paying a little extra on your mortgage 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 mortgage’s amortization schedule.
What Should I Know About Prepayment Penalties?
Prepayment penalties vary by lender. They can be charged if your mortgage is paid down or paid off early. Typically, prepayment penalties are equal to a certain percentage of the overall unpaid principal balance at the time of the payoff. Only certain types of payments may be penalized.
For instance, making extra payments each month may incur an extra fee of $500 if you make an extra payment on your mortgage using a lump sum amount. On the other hand, you may be able to add $500 to your monthly payment without a fee. Prepayment penalties are not standard across the board so be sure to check with your lender regarding their prepayment penalty policies.
If there are prepayment penalties, you will want to determine a break-even point that shows the cost-benefit analysis of paying off your mortgage early compared to benefiting from lower rates offered on your mortgage. Measure how a one-time fee compares to the thousands of dollars you could save with fewer interest payments. Assess the opportunity cost of being able to access your home’s built-in equity sooner to finance other needs down the road, like home renovations, college tuition, investment ventures, and more.
How Can Hero Loan Help?
At Hero Loan, it is our mission to help provide our veterans, military service members, and their families with the tools and knowledge necessary to better position themselves financially through homeownership. 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 complete idea of what the process entails and a more accurate 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 customized lending experience that meets their mortgage goals and 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 866-221-8707 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 financial freedom by owning your home sooner with extra mortgage payments.