Mortgage Payoff Calculator UsesWith this mortgage payoff calculator, estimate how quickly you can pay off your home. By calculating the impact of extra payments, you can learn how to save money on the total amount of interest you’ll pay over the life of the loan. Show
Planning to Pay Off Your Mortgage Early?Use the "Extra payments" functionality to find out how you can shorten your loan term and save money on interest by paying extra toward your loan's principal each month, every year, or in a one-time payment. Understand Your Mortgage PaymentYour mortgage payment is defined as your principal and interest payment in this mortgage payoff calculator. When you pay extra on your principal balance, you reduce the amount of your loan and save money on interest. Keep in mind that you may pay for other costs in your monthly payment, such as homeowners’ insurance, property taxes, and private mortgage insurance (PMI). For a breakdown of your mortgage payment costs, try our free mortgage calculator. Accelerate Your Mortgage Payment PlanGet creative and find more ways to make additional payments on your mortgage loan. Making extra payments on the principal balance of your mortgage will help you pay off your mortgage debt faster and save thousands of dollars in interest. Use our free budgeting tool, EveryDollar, to see how extra mortgage payments fit into your budget. Calculate Different ScenariosSee how early you’ll pay off your mortgage and how much interest you’ll save. Let’s say your remaining balance on your home is $200,000. Your current principal and interest payment is $993 every month on a 30-year fixed-rate loan. You decide to make an additional $300 payment toward principal every month to pay off your home faster. By adding $300 to your monthly payment, you’ll save just over $64,000 in interest and pay off your home over 11 years sooner. Consider another example. You have a remaining balance of $350,000 on your current home on a 30-year fixed rate mortgage. You decide to increase your monthly payment by $1,000. With that additional principal payment every month, you could pay off your home nearly 16 years faster and save almost $156,000 in interest. How to calculate a mortgage paymentUnder "Home price," enter the price (if you're buying) or the current value (if you're refinancing). NerdWallet also has a refinancing calculator. Under "Down payment," enter the amount of your down payment (if you’re buying) or the amount of equity you have (if refinancing). A down payment is the cash you pay upfront for a home, and home equity is the value of the home, minus what you owe. On desktop, under "Interest rate" (to the right), enter the rate. Under "Loan term," click the plus and minus signs to adjust the length of the mortgage in years. On mobile devices, tap "Refine Results" to find the field to enter the rate and use the plus and minus signs to select the "Loan term." The mortgage calculator lets you click "Compare common loan types" to view a comparison of different loan terms. Click "Amortization" to see how the principal balance, principal paid (equity) and total interest paid change year by year. On mobile devices, scroll down to see "Amortization." Formula for calculating a mortgage paymentThe mortgage payment calculation looks like this: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1] The variables are as follows:
How a mortgage calculator helps youDetermining what your monthly house payment will be is an important part of figuring out how much house you can afford. That monthly payment is likely to be the biggest part of your cost of living. Using NerdWallet’s mortgage calculator lets you estimate your mortgage payment when you buy a home or refinance. You can change loan details in the calculator to run scenarios. The calculator can help you decide:
How lenders decide how much you can afford to borrowMortgage lenders are required to assess your ability to repay the amount you want to borrow. A lot of factors go into that assessment, and the main one is debt-to-income ratio. Your debt-to-income ratio is the percentage of pretax income that goes toward monthly debt payments, including the mortgage, car payments, student loans, minimum credit card payments and child support. Lenders look most favorably on debt-to-income ratios of 36% or less — or a maximum of $1,800 a month on an income of $5,000 a month before taxes.
Typical costs included in a mortgage paymentIf your mortgage payment included just principal and interest, you could use a bare-bones mortgage calculator. But most mortgage payments include other charges as well. Here are the key components of the monthly mortgage payment:
Typically, when you belong to a homeowners association, the dues are billed directly, and it's not added to the monthly mortgage payment. Because HOA dues can be easy to forget, they're included in NerdWallet's mortgage calculator. Reducing monthly mortgage paymentsThe mortgage calculator lets you test scenarios to see how you can reduce the monthly payments:
Monthly mortgage payments can go upYour monthly payment can go up over time if:
How much will an extra payment affect my mortgage?Since your interest is calculated on your remaining loan balance, making additional principal payments every month will significantly reduce your interest payments over the life of the loan. By paying more principal each month, you incrementally lower the principal balance and interest charged on it.
What happens if I pay an extra $250 a month on my mortgage?The additional amount will reduce the principal on your mortgage, as well as the total amount of interest you will pay, and the number of payments. The extra payments will allow you to pay off your remaining loan balance 3 years earlier.
Is it better to put lump sum on mortgage or extra monthly?Making a lump-sum payment always saves you money on interest. And depending on how you handle it, the payment will either shorten the time it takes to pay off your mortgage or reduce your monthly payment amount.
What happens if I pay an extra $200 a month on my 30If you pay $200 extra a month towards principal, you can cut your loan term by more than 8 years and reduce the interest paid by more than $44,000. Another way to pay down your loan in less time is to make half-monthly payments every 2 weeks, instead of 1 full monthly payment.
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