Table of Contents Hide
If you’d like to know how much interest you can save by increasing your monthly mortgage payment, then an early payoff mortgage calculator is what you need.
With a payoff mortgage calculator, you can calculate how quickly you can pay off your home.
By knowing the importance of making extra payments, you can see how much interest you’d save throughout the life of the loan.
Find out how a payoff mortgage calculator helps you pay your mortgage loan on time as you read through this article.
How Can I Payoff My Mortgage Early?
An effective way to pay off our mortgage early is by adding an extra amount to your monthly payments.
Using a payoff mortgage calculator, you can enter your loan terms as well as the life of the loan, then find out how much you’d pay monthly to pay off your principal faster.
What does the Early Mortgage Payoff Calculator Do?
The early mortgage payoff calculator helps you to find the most feasible ways to pay off your mortgage loans on time.
For example, maybe you have 30 years to pay your home mortgage loan. But you’d prefer to pay it in 20 years. The early payoff calculator shows you how to reach your goal.
Additionally, the early payoff calculator helps you;
- To know how much more principal you’d be required to pay every month. This would enable you to pay off the loan at your desired number of years.
- To know how much interest you’d be saving by paying off the loan early.
Generally, when paying the principal on a mortgage faster, it’s important you know that each servicer has its own method that ensures your principal goes towards paying off the loan.
How to Use the Early Mortgage Payoff Calculator
To use an early mortgage payoff calculator, you’d be required to enter the correct terms of your mortgage.
This can be seen on the “Closing Disclosure” part of your mortgage document.
You’d be required to answer questions like;
- What is your loan term? This means the number of years your loan is for.
- What is your mortgage amount? This means the amount you borrowed for your home mortgage.
- How much is your Interest rate? This is the percentage for which you will pay back your mortgage loan.
- How many years do you want to pay off your mortgage? This is the number of years you intend to pay off your mortgage with.
- How much do you owe? This refers to the outstading balance of your mortgage loan.
With these terms, the early mortgage payoff calculator gives you an accurate figure of how much you can pay to enable you clear your home mortgage on time.
What the Early Mortgage Payoff Calculator Shows You
The results of an early mortgage payoff calculator can be divided into two sections. Firstly, it shows you how to reach your goal. That is, how much principal and interest you’d have to pay monthly to meet your payoff time. And how much you’d have to add to the minimum monthly payment to reach your goal.
Next, the calculator shows you the total cost of the mortgage in respect to the principal and interest payments.
It shows the original monthly principal-and-interest payment , the total cost in principal and interest if you pay off the loan early, and the new principal and interest amount to reach your payoff goal.
How to Pay off a Mortgage Early
The general rule for paying off mortgages early is that you’d have to make extra payments. However, there are other methods to pay off the mortgage early.
These methods are;
- Pay more. Add extra to the monthly payments as we’ve established in this article.
- Design a structured way to pay more for your monthly mortgage payments. Here’s how to do so divide your monthly principal payment by 12, then add that amount to each monthly payment. With this, you’d end up making 13 payments, instead of the usual 12 payments, every year.
- Alternatively, you can deposit one-twelfth of the monthly principal payment into a savings account, and use it to make the 13th payment.
- Another method is that you can pay haf of your mortgage payment every two weeks. However, you have to be sure that your mortgage lender receives biweekly payments.
- Make a large sum payment towards the principal. You can do this anytime you receive a large bonus, win a cahs gift, or a lottery.
- Refinance to a shorter term loan. If you can refinance to a loan with a shorter term, and lower rate, then you have greater chances of paying off your mortgage loan on time. For example, you can refinance a 30 year loan to a 10 year loan. The best part is, the interest rate will definitely be lower.
I hope this article carefully explains what an early mortgage payoff calculator does for you and what its benefits are.
If you have any questions or suggestions, kindly let me know in the comments section.
- Mortgage: Simple 2021 Guide for Beginners and all you need Updated!!!\
- Mortgage Underwriter: Process, Salary, Jobs & How To Become a M.U Guide.
- Land Lease: All you need to Know in 2021 (Updated)
- Manual Underwriting Process for Mortgages, FHA & VA Loans