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Loan calculator paying extra on principal

How to cut a 30 year mortgage in half

Adding machineMaking extra payments on your mortgage can drastically reduce the number of years on the loan . . . and can save you a tremendous amount of interest. How much interest can you save with an extra payment every month? Take a look . . .

Initial Loan Amount $100,000 $200,000 $300,000
Term of the Loan 30 Years 30 Years 30 Years
Interest Rate 5.00% 5.00% 5.00%
Extra Monthly Payment 100 100 100
SAVINGS Save $30,580 in interest. You will pay off your mortgage 8 years and 8 months early. Save $37,069 in interest. You will pay off your mortgage 5 years and 2 months early. Save $39,937 in interest. You will pay off your mortgage 3 years and 8 months early.

If you’re thinking about refinancing your mortgage to a lower interest rate or decreasing the length of the mortgage, you might be wondering if it would be better to make an extra payment instead of going through the refinance process. The extra payoff calculator will estimate the time you can payoff the mortgage starting with your present balance.

This calculator will not accept partial months. For example, 26 years and 1 month. Please use whole numbers.

  1. Initial Loan Amount - The initial loan amount is the original loan amount on day one.

  2. Term of the Loan – How long was the mortgage for? Thirty years, 15 years, etc.

  3. Years Remaining – If the original term of the mortgage was 30 years, and you have been paying the mortgage for 5 years, enter 25 years in this box.

  4. Interest Rate – Enter the current interest rate

  5. Extra Payment – How much extra do you want to pay each month?

Frequently Asked Questions About Extra Payments

Can I be charged a penalty for paying off my mortgage early?

The answer is maybe. Here's what the Consumer Financial Protection Bureau says about prepayment penalties:

Whether you can be charged a penalty for paying off your mortgage early depends on what type of mortgage you have and the specific terms of your mortgage loan. Some loans have pre-payment penalties during the first years of the loan. These fees may impose substantial costs on homeowners with adjustable rate mortgage loans who want to refinance before their rates increase, and some fixed mortgages have prepayment penalties as well. Many states have laws that limit the amount or duration of these penalties. Whether your loan carries a prepayment penalty must have been disclosed in your loan documents. Sometimes it is only disclosed in something called the “Addendum to the Note” – look at the Note and anything with “Addendum” in the title. SOURCE: Consumer Financial Protection Bureau

Can you pay ahead on your mortgage?

Definitely call the mortgage company before you start paying ahead on your mortgage by making extra payments. Chances are, the additional mortgage payments will be applied to principal and not as future mortgage payments. And if the additional mortgage payments are applied to principal reduction, and you do not make next months' mortgage payment, the mortgage company will slap you with a late fee and post a late or delinquent payment on your credit report. If you need to pay ahead because of travel or other reasons, call the mortgage company and if they will permit it, get it in writing. Or better yet, find a reliable friend or relative to make the payment(s) or have the payment automatically debited from a checking or savings account.

Do extra mortgage payments go towards the principal?

The extra mortgage payment will be applied to principal on FHA, VA, USDA and conventional loans . . . but, you should call the bank, mortgage company or servicer just to make sure that the over payment will be applied to principal. The lender may have specific requirements for the over payment. Always keep your mortgage statements to prove the over payment(s).

Do FHA loans have a prepayment penalty?

Prepayment penalties are prohibited with FHA, VA and USDA mortgages

How much do you save by making one extra mortgage payment a year?

Making just one extra mortgage payment each year can drastically reduce the amount of interest you pay and shorten the term of your mortgage. Here's an example:

Loan Amount $250,000
Interest Rate 5%
Term 30 Years
Monthly Payment $1,342.05
Total Monthly Payments : $483,133.89
Extra Payment $1,342.05
Total Monthly Payments : $461,835.60
Interest Savings $21,298.29
Mortgage Payoff 27 Yrs 8 Mts
Early Payoff 2 Yrs 4 Mts

Is it better to pay the principal or interest?

Interest is calculated on the principal balance, therefore, extra payments should always be paid against the principal balance and the interest balance will decrease.

Is mortgage interest calculated daily or monthly?

Mortgage interest is typically calculated monthly