|Original Payment :||$1,342.05|
|New Payment :||$1304.12|
|New Length of Loan :||32 Years 2 Months|
If you start to pay more or less toward your mortgage each month than the original payment amount, you can save or add a number of years to the length of your mortgage. Even the difference of just $40 can save you a couple of years or add a couple years to the length of your payment.
If you took out a mortgage loan for $250000.00 with a 5.000% interest rate, for example, you could expect to pay $1,342.05 per month. If you change your payment to $1304.12, however, you will have to pay on your mortgage for 32 year(s) and 2 month(s) instead of 30 years.
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If you only pay your established monthly mortgage payment each month, it will be easy to figure out when you are going to pay off your house: At the end of your loan term, usually in 30 years.
However, there are a number of reasons why you might inadvertently change the original terms of your loan, leaving you uncertain when you will finally pay off your mortgage. For example, you may lose your job and need to work out a reduced or delayed payment plan with your lender. Since interest is still accruing during that time, you don't just move back the term of your loan by the number of months you were paying less than usual. You will need to recalculate your payoff date.
You may also come into some more money that you want to put toward your mortgage. For example, you may get a great bonus from work at the end of the year or at the completion of a special project. You may win some money through a raffle or a special trip to the casino. You may come into some inheritance that you want to use to pay down your mortgage quicker. You may just get a better job in which you're making more money, or you may eliminate some other debts or free up some money in your monthly budget that you now want to put toward your mortgage to pay it off faster.
Paying extra money on your mortgage, whether you do it each month or you do it in periodic payments such as when you get a bonus, can help you to save money over the life of the loan. You'll reduce the overall interest you have to pay. Depending on how much extra you pay, you could save yourself thousands in interest charges over the years.
Using the above calculator can help you get a clear picture of how much more quickly you can pay off your loan based on how much extra you plan to pay each month. The above calculator is also useful if you are trying to figure out how much extra you would need to pay if you want to have your house paid off by a certain date to meet financial goals, such as being able to retire early.
To use the calculator, just put in the amount of the original loan, the interest rate, the length of the loan, and the monthly payment that you propose. The results will be e-mailed directly to you within moments with a plain-English analysis. If you are trying to figure out how much you need to pay to meet a pay-off goal, you will just need to keep experimenting with the monthly payment until you get the results you want.
Of course, the calculator can only give you an estimate to help guide your financial planning. You will need to talk directly with a loan counselor to understand how your payments impact your particular loan. For example, you loan may include a penalty for early re-payment. By talking to a loan counselor, you can understand all the circumstances that may affect your loan so that you can make the best decision to meet your financial goals.