Paying extra on your mortgage saves interest and gets your home paid off sooner. Investing that same money might grow more, or it might not. Type in your numbers to see both sides.
Example numbers are filled in. Change them to yours.
First, we find your normal monthly payment for principal and interest. Then we add your extra payment and see how fast the loan gets paid off and how much interest you skip.
Next, we pretend you put that same extra money into an investment instead. To be fair, both plans are checked on the same day: the day your loan would end if you only paid the normal amount. If you pay the loan off early, we assume you then invest your whole old payment every month until that day.
Paying extra on a loan gives you a sure "return" equal to your mortgage rate. Investing might earn more or less, and it can go down. This tool does not count taxes, fees, or the mortgage interest tax deduction.
A $200,000 loan at 6% for 30 years has a payment of $1,199.10 a month. If you pay $100 extra each month, the loan is paid off in 295 months (about 24 years and 7 months). That is 65 months sooner, and you skip about $49,138 in interest.
It depends. Paying extra saves interest at your mortgage rate, and that saving is sure. Investing could earn more over time, but returns are not promised and can go down. Many people also keep an emergency fund first.
It depends on your balance, rate, and how much extra you pay. For example, $100 extra a month on a $200,000 loan at 6% for 30 years saves about $49,138 in interest and ends the loan about 5 years and 5 months early.
Yes. A lump sum lowers your balance right away, so less interest builds up every month after that. Ask your servicer to put it toward principal.
Usually no. Most loans keep the same payment and just end sooner. Some servicers offer a "recast" that lowers the payment after a big lump sum, often for a fee.
Most home loans today have no prepayment penalty, but some do. Check your loan papers or ask your servicer before you pay extra.
Paying extra is one choice. A lower rate or a shorter loan might help too. Call me and we can look at your real numbers.
Estimates only. This is not a loan offer. These results use simple math and the numbers you type in. They are not a pre-approval, a rate quote, or a promise to lend. Your real rate, payment, and costs depend on your credit, income, home, loan type, and other things. Not all applicants will qualify. This is not investment or tax advice. Investment returns are not guaranteed. Travis Jost, Mortgage Loan Originator, NMLS #2191646. Heathrow Mortgage, NMLS #1849599. Equal Housing Lender.
