How to Calculate the Difference Between Mortgage Balance & the Payoff Amount

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When you are getting ready to pay off your mortgage, it helps to know the exact amount that you will owe so you can send a payment for the correct amount. If you are selling your home, knowing the payoff amount helps you plan how much money you will receive from the sale. Although your mortgage company should be able to tell you the exact amount if you call, you can also calculate it on your own using your most recent statement.

Things You'll Need

  • Current mortgage statement
  • Mortgage origination documents

Look up the balance on your mortgage on your current statement. This might also be called the remaining principal or the outstanding balance.

Look up your current interest rate on the mortgage statement. Divide it by 360 to calculate your daily interest rate. Divide this by 100 to convert it to a decimal for calculations. For example, if your interest rate is 6.2 percent, your daily rate is 0.0172 percent, or 0.000172 as a decimal.

Count the number of days between your last payment and the date when you expect to pay off the mortgage. Do not include the date of your last payment in the count, but do include your payoff date. For example, if your last payment was on May 31 and your payoff date is June 25, your answer is 25 days.

Multiply the mortgage balance by the daily interest rate and the number of days between payments. For example, you could multiply a balance of $59,103 times 0.000172 times 25 to get $254.14. This is the amount of interest you will owe.

Add the taxes and insurance that you have to pay for the month to the lender, if any.

Add the amount of your prepayment penalty, if applicable. Not all mortgages have a prepayment penalty. Look up your penalty on your mortgage origination documents.

Tips & Warnings

  • Some mortgage companies require you to send a full extra month's payment when you pay off your mortgage. The company then refunds you any excess after closing the mortgage. This ensures that you do not have to make additional payments if your first one was not enough.

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