When I was trying to figure out how much I would save, I searched the internet over, trying to find a calculator that would show me. I never found one, so I built my own from scratch. Try it for yourself.
You might be surprised at how much you will save.
The more you know, the more you’ll save. Discover how it works with Shawn, the young business professional, and Cammi, the college senior education major.
With just 50 pages and over 35 illustrations and models, it’s a quick, fun read.
This calculator is like a satellite veiw of your finances. It will give you a very good estimate based on your numbers, but you must consult your mortgage provider for specifics regarding your mortgage or loan. This calculator will give you a very good estimate for how much money you will save if you make prepayments. Consult your loan provider for exact details. This calculator is intended as a general guide. Calculations are based off of monthly balances, and since mortgage interest is calculated daily, there will be calculation and rounding differences. You must input your information accurately. Again, this is intended as a general planning tool. It is a very powerful tool, but again, consult your loan provider for exact calculations.
Here’s how it works.
1. Loan Amount
This is how much you originally borrowed. Note: The purchase price of your house may be different than your loan amount (e.g. you paid 3.5% down, or you rolled closing costs in, etc.)
2. Interest Rate.
This is your loan’s interest rate.
3. Length of Loan
This is how long your original loan is, not how much is remaining.
4. Current Balance (This is where it gets really cool!)
If you are getting a new loan, leave this blank. However, if you already have a loan that you’ve made payments on, enter your loan balance here, if you know it. If you have already paid down some of your mortgage or loan, good for you! This feature will show you how much liability you have left on your loan and will allow you to see how much prepayments would save you based on your current balance.
5. One-time Prepayment
A Dollar Saved is Five Dollars Earned. This will show you approximately how much a single prepayment with your next payment would save you. Try $1, and see how much your $1 is worth.
6. Regular Monthly Prepayment
Two Dollars Saved is a Thousand Dollars Earned. This will show you approximately how much regular monthly prepayments would save you. If you want to make a difference in your financial outlook, this is the most important number of your month.
7. Your Current Mortgage
This shows what your current mortgage payment is, with Principal and Interest.
Note: Out of the millions of calculations in my calculator, the “Monthly Payment” is the only figure that matters to most every homeowner. Please, look beyond this box! There is so much more to discover!
Note: Taxes, Insurance, Escrow Compounds, HOA Fees, etc. are not included. Those are all technically not mortgage related. When you pay off your mortgage, you will still be required to pay taxes, and you certainly should pay insurance and other fees, or you put your investment at huge risk. P+I is what we are most concerned with. You can’t change the other variables, but you can control how much Interest you pay by paying off your loan. This table also shows you approximately how many more payments, and how much interest and principal obligation remain, assuming on-time monthly minimum payments.
8. Your Prepayment Mortgage
This shows what your mortgage could be with prepayments factored in.
9. Prepayment Savings
This is what it is all about. When you make a prepayment, you save interest liability. The savings are immediate. You will save a lot of interest with prepayments, and you will save years off of your mortgage.
10. Total Savings (P&I)
I hope your jaw drops, eyes open, and spending habits change when you see how much you will save with prepayments. In the case of just $1 paid once, you will save interest liability. However, where does that $1 go? That $1 is 100% principal. If you’re at the first of your loan, the rest of your payment might only be 5% principal, or 10%, or 20%. But that $1 is 100% principal. It’s like putting money in the bank. When you make a prepayment, that prepayment amount goes directly to you. That is your money. But how do you access it? There are several ways to access it. It’s in the book! But don’t be fooled. That prepayment is YOUR money.