How to Calculate Payoff on a House
Everyone dreams of the day that their mortgage is paid in full. No debt can equal a lot less stress in your life. To calculate how extra payments can reduce a mortgage, you must know a few bits of information about your mortgage. Also, to calculate how to pay the mortgage in full in one full payment, another bit of information is needed. This is a comparison of those two methods.
Other People Are Reading
Instructions
-
Calculating a mortgage payoff in full
-
1
First, call your mortgage holder and ask for your daily interest expense (per diem interest) and your current mortgage balance as of today's date. You will need your account number and the customer service number for your mortgage service provider; both bits of information will be on your monthly mortgage statement.
-
2
Figure out your date of payoff, which is the calendar day that you will pay off your mortgage (and/or the mortgage company receives your payment). Count the number of days between your payoff and the date of your mortgage balance. This is the number of days of interest that you need to add to your mortgage balance.
-
-
3
Multiply your days times your daily interest. Add this number to your mortgage balance and that is your mortgage payoff.
-
4
To calculate how fast you can pay off your mortgage, it is best to use a mortgage calculator. One can be found at LocalLender.info or at MortgageCalculator.org.
-
5
Enter your mortgage balance and your monthly payment into the calculator. Using the options provided, find out how fast you could pay off your mortgage if you made one extra payment per year, two extra payments per year, etc.
-
1
Tips & Warnings
A good rule of thumb is, for every extra payment you make per year, you shave 7 years off of a 30 year mortgage. Additionally, if making one lump sum payment is too much for you at one time, simply pay your mortgage payment every two weeks. This is the equivalent of 13 payments in one year, or one extra payment per year.
Contact your mortgage servicing company to ensure that your loan does not have a prepayment penalty. If there are prepayment penalties and you make additional payments or attempt to pay off the loan in full, you probably will be charged extra fees.
