Calculate Your Savings With Our Amortization Calculator

How soon can you pay off your mortgage with $50 extra each month?

Amortization calculator with extra paymentWhen you're making a big purchase, it's important to think about how you're going to pay for it. One option is to make extra payments on your mortgage. This can save you money in the long run.

Use our amortization calculator to see how much you can save with extra payments. For example, if you have a $200,000 mortgage and make an extra payment of $100 per month, you'll save over $30,000 in interest and pay off your loan nine years early. Making extra payments is a great way to get ahead on your mortgage. Not only will you save money in the long run, but you'll also reduce the amount of interest you pay each month.

Pay Off Your Mortgage in Half the Time

Your mortgage consists of two parts: the principal and the interest. The principal is the amount of money you borrow, while the interest is the fee charged for borrowing that money.

The amortization schedule shows how much of your monthly payment goes towards the principal and how much goes towards the interest.

You can save money on your mortgage by making extra payments. These extra payments will go towards the principal, reducing the amount of interest you pay over the life of the loan.

Even a small over payment each month will drastically reduce the amount of principal owed.

Q. Are there any expenses associated with paying off a mortgage?
A. A prepayment penalty is a charge by some lenders when you pay off your mortgage loan completely or in part ahead of time. If you're required to pay a prepayment penalty, you agreed to it when you purchased or previously refinanced your home. Penalties for early repayment might not apply to all mortgages.

Most mortgages that are subject to a prepayment penalty usually apply only if you pay off your mortgage in full within a specific number of years, usually three or five years.

In some cases, if you pay off a sizable amount of your mortgage at once, you might be liable for a prepayment penalty. Prepayment penalties are often eliminated if you make extra principal payments on your mortgage in small amounts-but it's always a good idea to check with your lender.
SOURCE: Consumer Financial Protection Bureau

Q. Are you able to make additional payments on your mortgage principle?
A. The majority of mortgage providers enable you to make additional principal payments if you so want. For instance, you may pay an extra $50 or $100 each month or make one more mortgage payment every year. The benefit of this strategy is that it reduces the overall amount of interest paid during the loan's life.

Q. Is it possible for me to make a significant payment on my mortgage?
A. The lender/servicer will always take an extra payment in order to mitigate the risk of default.

Q. If I refinance, do I get a reimbursement of my escrow funds?
A. Yes

Q. How can I reduce the amount of my escrow payment?
A. While you will be unable to reduce the principal and interest component of your mortgage payment, if your property taxes are escrowed, you may seek to appeal the real estate taxes. Look for a less expensive homeowner's insurance policy. Is your mortgage insured?

Q. Is it true that paying down the principal lowers the amount of interest charged?
A. Paying extra money to your mortgage balance does not result in a reduction in your monthly payment. However, the extra principal payment will lower the total interest paid during the loan term.

Woman calculating the savings with an amortization calculatorConclusion

An amortization calculator with extra payments can help you determine how much money you can save on your mortgage by adding extra payments to your loan. By making extra payments, you can pay off your mortgage sooner and reduce the amount of interest you pay on your loan.