Remember the amortization of a loan represents
the number of equal monthly payments required to payoff the loan
balance over a specified period of time. So it stands to reason
that if you have a 30 year mortgage and you choose to pay it off
in a period shorter than 30 years, say 25 years, you would have
to increase your monthly payment. Of course, if you chose even a
shorter payoff period, say 20 years, you would have to further increase
your monthly payment.
Let’s view an example of what we are talking
about. In "Our Example," our loan will have the following
terms:
"Our Example"
Current Loan Balance
Current Interest Rate
%
Current Monthly Payment
Current
Remaining Term
Months
Now we will determine the monthly payment required
to pay off this loan in 25 years, 20 years, 15 years and 10 years
and the interest you would save by shortening the term. Here’s
what it looks like:
AmortizationPeriod
Years
Months
Monthly
Payment
Increase
In
Payment
Total
Interest
Paid
Total
Interest
Saved
30
360
1,896.20
382,632.00
25
300
2,025.62
129.42
307,686.00
74,946.00
20
240
2,236.72
340.52
236,812.80
145,819.20
15
180
2,613.32
717.12
170,397.60
212,234.40
10
120
3,406.44
1,510.24
108,772.72
273,860.75
This calculator will allow you
to determine the monthly payment required to pay off your
existing mortgage for any term you desire. This might be of
particular interest to you if you have begun plans for retirement
in the not too distant future.
"Your Example"
Please begin by providing the following
information about your current loan. Don’t be concerned
about your current remaining term; we’ll calculate that
for you.
The following table shows the savings obtained by
shortening the amortization period on your loan. The first entry in the
table is your current loan's figures. The remaining tables are are
calculated based on typical loan periods that are shorter than your current
term.
For comparison purposes, you may enter an additional
amortization period (in years) and click the Calculate button.
Your results will appear here once you enter
your loan information and press the Calculate button.
11 Crow Canyon Court,
Suite 100, San Ramon, CA 94583
(925)820-5557 ~ fax:(925)820-1141 contact@preferredfinancial.com
Broker ID# 00605612
