What if I Pay More Every Month? One of the largest expenses that consumers undertake is the mortgage on their home. Over the course of 15 to 30 years, the typical terms for mortgages, an enormous amount of money is spent paying interest on this particular expense. Sometimes it may seem like money just thrown away. Moreover, it is most likely the largest monthly expense that homeowners have. Have you ever considered what it would be like to pay it off sooner and free up some of that cash?
This calculator can help homeowners decide whether it makes more sense to pay down the principal on the home, saving money on interest and shortening the life of the mortgage, or use the money elsewhere. Simply input basic information such as the principal amount, the interest rate, the term on the mortgage, and the additional amount of money you would like to include in your payment. This calculator does all the hard work and figures out just how much you can save in time and money.
Each monthly mortgage payment you make is split between the principal and the interest. The principal is the amount of money that you borrowed including the purchase price of the home less the downpayment as well as any additional fees that you rolled into the loan, for example closing costs and other fees. The interest is the percentage rate that you pay the lender for borrowing the money. With each payment, the portion that goes toward the principal gradually increases and the portion that goes to interest gradually decreases.
Furthermore, when you include an additional sum of money with your monthly payment, the entire sum of extra money goes to the principal of the loan, thereby reducing the mortgage balance that much more. It is important to remember that your monthly payment does not change. Even if you decide to stop paying the additional amount, you must continue to pay the predetermined monthly payment.
Additional money included in payment in the early years of the loan makes the greatest difference to the amount of interest spent on a loan. Wouldn't it be nice to save a nice tidy sum of money, pay your mortgage off early, and sit back and relax? Use this calculator to determine how much sooner you can pay off your debt, save money on interest, and get back to financial freedom.
Calculator Legend
- Amount: Enter the amount of money that will be included in the loan.
- Interest Rate: Enter the rate of interest that is being charged with the loan as a percentage.
- Length: Enter the number of years that the loan will be held.
- Additional Payment: Enter the additional amount of money that you will include in each of your monthly payments.
DISCLAIMER: There is NO WARRANTY, expressed or implied, for the accuracy of this information or it's applicability to your financial situation. Please consult your own financial advisor.
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