If you enter both values they will be summed. Partial years: If you had 244 months remaining you could either enter 20 years and 4 months or 0 years and 244 months.If you are 42 months into a 30-year (360 monthly payment) mortgage then you have 318 monthly payments remaining. Payments made: If you do not know how much time you have remaining you can calculate the total number of payments in the initial loan term & then subtract how many payments you have already made.Converting years to months: multiply the years in the loan term by 12.A 20-year loan is 240 monthly payments, A 15-year loan is 180 monthly payments, a 10-year loan is 120-monthly payments and 5 year loan is 60 monthly payments. Common loan terms: Most home loans are structred as 30-year loans, which is 360 monthy payments.Be sure to ask your lender for instructions on how to make your extra principal payment.Īnd don’t forget: When you get to 20 percent equity, ask your lender to remove the mortgage insurance payment.Are you starting biweekly payments in a middle of a loan schedule? It’s always wise to mark your extra principal when you make your payment and to check that your bank has credited it to your principal, rather than to interest. Most loans allow you to prepay principal. Make sure you get credit for an extra mortgage payment. Nevertheless, it’s good to know that the money is available if you need it. You have to use home equity loans carefully, because if you don’t repay them, you could lose your house. Are there any other advantages to making extra mortgage payments?Īnother advantage to paying down your mortgage more quickly: As you build up home equity, you get the ability to tap that equity in an emergency or if you need to pay for an expensive repair or addition. The sooner you get to 20 percent equity, the sooner you can get rid of your mortgage insurance and be free of paying the premium. Mortgage insurance covers the bank in case you default it has no payoff value to you. So for a $320,000 loan, mortgage insurance would cost around $133 to $400 per month. In general, mortgage insurance is about 0.5 percent to 1.5 percent of the loan amount per year. Your premium is part of your loan payment. For one, most banks require mortgage insurance if you have less than 20 percent equity in the residence. Higher home equity has several advantages. Paying down a mortgage early also accelerates your home equity, which is the value of your home minus the debt you owe. If you started paying $100 more a month in the fifth year of that loan, making your payment $2,144 a month, you’d save $39,674 in interest and shorten your loan term by two years and eight months. Your principal and interest payment would be $2,044 a month. Let’s take another look at that $320,000 loan. (Interest rates on 15-year mortgages are nearly always lower than those on 30-year mortgages.) Why should I pay off my mortgage early? What if you decided on a 15-year mortgage at 5.9 percent? Your monthly payment would rise to $2,683, but you’d pay $162,956, in interest over the loan - a savings of $252,779 in interest costs, compared with the 30-year mortgage discussed above. For example, the principal and interest for a $320,000 loan at 6.6 percent would be $2,044. If you’re thinking of refinancing your mortgage or considering your options for a new mortgage, the calculator can help you with that, too. If you start paying additional principal, you’ll save a lot of money in interest over the life of the loan. Mortgage interest is amortized so that you pay the bulk of your interest in the first years of your mortgage. (You can get current rates from mortgage giant Freddie Mac.) During that time you’ll pay $320,000 in principal plus another $415,734 in interest, for a total $735,734. Let’s say you borrow $320,000 for your home at 6.6 percent. The AARP mortgage calculator can help you do just that.Īt some point at a mortgage closing, you’ll have to sign a statement saying that you understand the amount of money you’ll be paying to the bank over time. Ideally, you’d like to get rid of the debt as quickly as possible while building up the amount of money you have invested in the home. How does the mortgage payment calculator work?įor most people, a house is their largest investment and a mortgage is their largest debt.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |