How to Calculate Total Interest Paid on a Home Equity Loan

Now that you've taken out a home equity loan and are making the payments, you might want to know how much you're actually paying in interest each month and over the life of the loan. Here's how to find out.

Instructions

1. Determine the amount of the loan. The loan amount is also known as the loan principal. It is the actual amount you borrowed before any fees or charges were applied.

2. Find your interest rate. If you have your original loan papers handy, look for your interest rate. If for some reason you cannot find your original papers, contact your bank. You need to have the interest rate in order to calculate the total interest paid on your home equity loan.

3. Write down the repayment terms. In other words, you need to know how many years you have to repay the loan. For calculation purposes, convert the annual figure to a monthly number (i.e., 5 years equals 60 months).

4. Look for a simple-to-use online loan calculator. The easiest way to determine the total interest paid on a home equity loan is to plug the numbers into an online loan calculator. Once you insert the numbers, the calculator will do all the work.

5. Do the simple math. Once you've determined how much you are paying in interest each month, multiply the monthly interest by the number of payments you've made to find out how much total interest you paid to date on your home equity loan.

Tips & Warnings

• The above applies to a straightforward fixed rate mortgage. If you have an adjustable rate mortgage, you will need to use an adjustable rate mortgage calculator.

• BankRate.com has a straightforward and easy to use online calculator. The calculator will break out the principal and interest.