Should I Make Extra Payments on My Mortgage?
By making extra payments on your mortgage you could build equity faster and reduce your amortization period, resulting in paying off your mortgage sooner, paying less interest overall and becoming an attractive risk for lenders. Use this calculator to find out if you should consider making extra payments on your mortgage.
Enter the loan amount of your mortgage.
Enter the term of your mortgage in years.
Annual Interest Rate
Enter the annual interest rate of your mortgage.
Enter the value of your property. This value is used to determine if you need to pay mortgage insurance. Lenders require mortgage insurance if your loan to value ratio is less than 20%.
Yearly Property Taxes
Enter your estimated yearly property taxes for this mortgage. Property taxes are usually calculated as a percentage of your home's assessed value. For example, if you pay 0.5% in property taxes of the assessed value, a home assessed at $270,000 would have a yearly property tax bill of $1,350.
Yearly Property Insurance
Enter your estimated property insurance. Lenders require that you carry home owners insurance on the property to protect their investment should a catastrophic accident occur.
Extra Monthly Payment
Enter the extra payment amount you plan to make. The calculation assumes that you will make the same extra payment every month for the life of the loan.
Number of Payments Made
Enter the number of you have already made on the mortgage. If the mortgage is new enter 1. If you've made one year of payments enter 12.
Monthly Payment Information
Principal & Interest Payment
This is the principal and interest portion of your payment calculated from the data
entered to the right.
Taxes and Insurance
Annual property tax and insurance are used to determine your total monthly mortgage
payment. The tax and insurance annual payments are proportioned over 12 months and
subtracted along with mortgage insurance to determine your principal and interest
Mortgage insurance is a policy that insures the lender against loss should the homeowner
default on a mortgage. Normally, if you have a down payment of 20% or greater you
do not have to pay mortgage insurance. For the purposes of this calculation we calculate
estimated mortgage insurance based on the value you entered for your home and the
new loan amount.
Total payment of your current and new mortgage based on the input to the right.
How extra payments will affect your mortgage.
500 Imperial AvenueOakdale, MN 55128www.Novation.org
The HomeLoanLearningCenter.com provides step-by-step information
on how to become financially literate.