With my mortgage refinance in the works, I figured today would be a good day to share a simple tool for calculating how you can, by paying just a little extra on your monthly mortgage bill, pay it off sooner and save tons of money in the process. I’ve always rounded up our payment to the nearest hundred dollars – for the past few years, that means just $35 a month extra – but while that seems a rather insignificant amount, over the course of a 30-year fixed-rate mortgage that would knock SIX YEARS off the end of my mortgage period. Six years, and some seventy-thousand dollars in interest payments.
Working on my new mortgage terms, I wanted to see how I can pay it off sooner, like in 20 years instead of 30, and so I pulled up a handy-dandy calculator in Excel that lets you play with the numbers. For me to shave ten years (and save over $80k in interest payments) I would have to send in an extra $300 a month – but on my new terms that is still less than what I was paying so it’s very doable, and would save me so much money…
If you want to give it a try, here’s a link to an Excel worksheet that you can customize with your mortgage balance and interest rate, and lets you play around with other info (like the extra payments): Home Mortgage Calculator in Excel
If you are not an Excel fan, you can do this kind of thing online as well; here’s a link to a very simple one: Mortgage Payoff Calculator