City-Data Forum How do I calculate extra payments when they are not always the same? (loan, mortgage calculator)
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10-21-2008, 06:39 PM
 622 posts, read 2,850,620 times Reputation: 303

I've recently commented on how I could save a few months off the end of my mortgage by paying a once per year payment at the beginning of the year instead of an extra payment each month for the whole year. The biggest reason I'm not doing this is that I don't know how to calculate the exact payoff date this way.

Using an online calculator is easy when you punch in \$XXX/month for the entire loan, but after 5 years of this, how can I add A lump sum once per year or an additional few hundred here or there and still know the payoff date?

Sure I'll still be ahead in terms of payoff date, but all the fun' of knowing the date of payoff is gone.

I think I've read about subtracting principal amount by the extra payment amount somehow? Not sure how that works, and definitely not sure how it would work 5 years into paying extra payments.

I'd love to have an 'advanced' calculator. lol

10-21-2008, 06:45 PM
 Location: Cave Creek, AZ USA 1,766 posts, read 5,454,499 times Reputation: 1058
Take your P&I payment, divide it by 12 and pay that much extra each month. That will knock the last seven years or 84 payments off the end of a 30 yr. amortized mortgage.

10-22-2008, 07:41 AM
 622 posts, read 2,850,620 times Reputation: 303
Thanks Rick. Wow, that seems like a good deal. I pay more than that right now, about 40% of total P&I and will halve my 30 year payout into 15 years. I have 10 years left, since I've been doing it for 5 years so far. I've used some online calculators but they are pretty straight forward with one set of numbers. I can't punch in more than one or two different numbers for different months.

I just used the calculator on top of this page. It seems to work OK, but still doesn't give an accurate answer. Well, you get what you pay for, right?

If I had an interactive chart in front of me, I wholeheartedly think my mortgage would be paid off sooner than that. There's something about 'seeing' the mortgage go down that gets people more eager to pay it off, IMO. For now, the extra principal payments each month will have to do.

10-22-2008, 07:51 AM
 878 posts, read 1,846,679 times Reputation: 460
You can set up an amoritization table in Excel. You can then reduce the principle by the amount you pay extra in the appropriate months .

That should give you a fairly accurate answer.

10-22-2008, 07:54 AM
 622 posts, read 2,850,620 times Reputation: 303
Thank you Zman0. I'll have to look into that.

10-22-2008, 07:59 AM
 305 posts, read 1,483,870 times Reputation: 149
So, is it better to send extra money on the loan every month or once a year at the beginning of the year?

We plan on paying an extra \$100 a month every month for at least 10 years. That should reduce significantly the amount owed on the mortgage and cut it back by quite a few years, right?

10-22-2008, 08:15 AM
 622 posts, read 2,850,620 times Reputation: 303
Quote:
 Originally Posted by teebopop So, is it better to send extra money on the loan every month or once a year at the beginning of the year? We plan on paying an extra \$100 a month every month for at least 10 years. That should reduce significantly the amount owed on the mortgage and cut it back by quite a few years, right?

If you start from day one, then it is better to pay the \$1200 at the first payment, then every year after. It is not better to wait one year, THEN pay the \$1200 you've saved up at the end of the year. If you're saving the \$1200 just to pay it at the end of the year, then it's more worthwhile to just pay as you go every month.

I'm assuming you will have the \$1200 at the begining of the year, so the answer is pay the total amount.

The online mortgage calculators will assist you in seeing these two scenarios played out. In my case it would save about 5 months off the end of the loan.

10-22-2008, 01:02 PM
 Location: Cary, NC 1,036 posts, read 3,628,214 times Reputation: 503
Quote:
 Originally Posted by teebopop So, is it better to send extra money on the loan every month or once a year at the beginning of the year? We plan on paying an extra \$100 a month every month for at least 10 years. That should reduce significantly the amount owed on the mortgage and cut it back by quite a few years, right?

Its better to pay the money as soon as you have it.

For example, if you have \$1200 today... pay it this month. If you only have \$100... pay it this month, dont wait until you have \$1200 next year.

The reason is because the monthly interest due will be calculated every month. As soon as you pay the extra to principle, it will start saving you monthly interest. If you were to wait 12 months to collect \$1200, you missed all those prior months savings.

Granted the benefit of \$100 off a \$200,000 loan is going to be pennies. But compounding that over 30 years.....

10-22-2008, 09:54 PM
 Location: Sarasota FL 6,520 posts, read 8,609,024 times Reputation: 6033
Doesn't your monthly statement have a 'balance due' line to help with your calculations?

10-23-2008, 08:15 AM
 622 posts, read 2,850,620 times Reputation: 303
Quote:
 Originally Posted by d4g4m Doesn't your monthly statement have a 'balance due' line to help with your calculations?
Monthly statement? Hmmm... I get one at year end for tax purposes. It does have the balance due on it.

I think I do need to get an Excel format like mentioned above. That would ultimately do it.
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