A 30 year fixed rate mortgage may keep monthly payments significantly lower than a 15 year, but the interest can pile up quickly. At the end of a 30 year mortgage, the interest payments can end up being more than the original loan principal. By making extra payments, a homeowner can shorten the term and save a good deal of money. A mortgage calculator can help compute how much extra a homeowner needs to pay to save big.
How to use the mortgage calculator
Find a calculator to fit your needs. Bankrate.com offers a calculator that has an “extra payments” feature. Input the mortgage amount, the term and the interest rate of the current mortgage. Then hit “calculate” to see your monthly payments. Underneath “extra payments,” enter either a monthly, yearly or one-time payment. Click on “show/recalculate amortization table”, and check the amortization table to figure out how much can be saved. Play around with the payments to find the best extra payment for the budget.
Refinance insteadThose looking to save more can also find out how much refinancing can save them with a refinancing mortgage calculator. The calculator compares the current mortgage to the new one. It also takes other fees into account and computes a new monthly payment, monthly savings and the difference in interest. It then provides the total cost and the months required to recoup it.