Understanding the Mortgage Payoff Calculator

This payoff calculator helps individuals determine what period they’ll take paying their mortgage if they increase their monthly payments. By using it, you can find out how much interest you can save on a loan. As this calculator also creates an amortization schedule, you’ll know at what rate your loan balance decreases with additional payments. So let’s get to understand how this calculator works.

Overview

With most loans, one can pay additional payments to their principal monthly payment without penalties. Such payments allow individuals to repay their loans more quickly and save on interest. By reducing your repayment period, you also reduce your interest cost. The mortgage calculator, therefore, allows you to know how much interest you’ll save as well as your repayment period.

This calculator has four sections. One enters information about their loans as well as how much additional cost they’ll like to make on the top sections. Then, below that, you’ll see a summary of your new monthly payments as well as how much you’ll save. Further down is a chart that compares trends in one’s loan balance and interest costs for both principal and additional payments.

There’s also a “See Report” labeled box on top, which, if you click it, it’ll show your detailed amortization schedule that indicates your loan balances, the sum of the total payment and accumulated interest payoffs.

How to Use the Mortgage Payoff Calculator

You start by entering the remaining period of your loan repayment, how long your mortgage is, the full loan amount you were given, how much extra payments you’d like to make per month, and mortgage rate. Also, so that you get a satisfactory amortization report, indicate whether you’d want a month-by-month breakdown or year-by-year.

You’ll be shown by how many months your repayment length will be reduced in the blue box that is above your inputs. Interest savings will be shown on the right. Also, individuals can adjust any figures they enter using the green triangles.

Note that it’s wise that you enter your original loan amount and not the balance you’re remaining with. It’s also advisable that you include any closing costs when totaling your original mortgage. Additionally, one should also enter their mortgage rate instead of their APR to get an accurate report.

Conclusion

Making additional payments will help you shorten your loan repayment term. Plus, you’ll also save significantly on the interest. Individuals can use this mortgage calculator to determine what their exact repayment period is and how much they can save by making additional payments.