Calculating how long to pay off mortgage

Paying off a mortgage early requires you to make extra payments. But there's more than one way to pay off the mortgage early:. Add extra to the monthly payments, as discussed in this article. A structured way to add extra: Divide your monthly principal payment by 12, then add that amount to each monthly payment.

You end up making 13 payments, instead of the required 12 payments, every year. A variation of the above tip: Deposit one-twelfth of the monthly principal payment into a savings account each month, then use that money to make a 13th payment.

Pay half a mortgage payment every two weeks. You make 26 half-payments, equivalent to 13 full payments a year. If you want to try this, first make sure your mortgage servicer is set up to receive biweekly payments.

Make a lump-sum payment toward the principal. You might do this after receiving a bonus, inheriting money or winning a lottery prize — any time a large sum lands in your checking account. Coordinate with your servicer to ensure that the money goes toward reducing principal. Refinance to a shorter term. If you can refinance with a lower interest rate, for a shorter term, it's a win-win.

For example, you could refinance a year mortgage into a year loan. The monthly payments will almost certainly be higher, and you'll pay closing costs, but your overall interest expense will be dramatically lower. How do I pay off my mortgage early? What the early mortgage payoff calculator does. How to use the early mortgage payoff calculator. What the mortgage payoff calculator tells you. Other ways to pay off a mortgage early.

That is just what happens when you pay for goods and services using debt. Moreover, you may be using debt without even realizing it. While credit stimulates the economy, it does have to be used judiciously.

Credit is not money. Derived from the Latin word for "trustworthiness," credit is based on faith that the borrower will repay the debt with real money. One should not use credit in place of money when there is little or no likelihood that payment in real money will be made—using credit without the intent or ability to pay is theft. Today, credit has become a business in its own right.

Credit is issued by banks, savings and loans, credit unions, public utilities, and even merchants. This represents hundreds of billions of dollars in interest earnings to lenders. This is why credit card companies aggressively compete to get you to use their credit cards and services.

The marketing is so aggressive that consumers may lose sight of the fact that this is not free money and make excessive purchases to the point where they find themselves in financial difficulty. While credit is very important to the economy, its abuse is harmful. Your 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. For a breakdown of your mortgage payment costs, try our free mortgage calculator. Get 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.

Consider another example. Your original loan amount is the amount you financed in a mortgage loan when you purchased a home. Your remaining loan balance is the amount you have left to pay on your mortgage loan. The loan term is the amount of time it will take to pay a debt. Loan terms are typically based on how long it will take if only required minimum payments are made.

Your home equity is the difference between the value of your home and how much you owe on it. To calculate your own home equity, just subtract the amount you owe from the market value of the property.

When you have a mortgage on your home, the interest rate is the ongoing amount you pay to finance your home purchase.