Mortgage Payment-to-Loan Calculator With Changes
See How Much Extra Payments will Reduce Principal Owed on a Home
Nov 11, 2009
Making extra payments on a mortgage will improve the financial situation of a homeowner by reducing the total principal owed to the lender. A mortgage payment-to-loan calculator shows the changes to the total principal that will result from extra payments. In addition to a lowered monthly payment, reducing the amount of principal owed on a home loan has several other effects on the overall financial situation of a homeowner.
Lower Monthly Mortgage Payments
To get lower monthly mortgage payments, many homeowners plan for the future by making extra payments. During the first few years of the mortgage, nearly all of scheduled payments go directly to the interest on the loan. Extra payments, however, apply to the principal, or the amount of money actually owed on the loan. Each extra payment lowers the amount of the principal, which will lower the monthly mortgage payments in the event of refinancing.
Making additional payments in preparation for refinancing is a good choice for individuals who needed a lower payment initially, but are now able to make larger payments. Paying off principal while waiting for the right time to refinance ensures better terms once the changes are made.
Better Home Equity Loan Terms
Home equity loan terms are improved by having a lower amount of principal. Lower principal on a home loan means that a homeowner has more equity in the home. The amount of equity in a home refers to the percentage of the home that is paid off as measured against the total value of the home.
The lower the amount that is owed on the home, the more equity the homeowner has. A larger amount of equity means that the home is a greater asset, which makes it valuable to the bank. The greater value in the home, the more the bank will be encouraged to offer home equity loans or lines of credit.
Using Home Equity Lines of Credit
Home equity lines of credit can be used for renovations or home improvements. Making improvements increases the value of a home, which also raises the amount of equity.
Mortgage Refinancing Calculator
Use a mortgage refinancing calculator to determine the changes that will arise from extra payments. Planning out how many extra payments are needed, and how much the payments need to be, allows a homeowner to see how a mortgage will be affected in the long-term. This calculator shows how a mortgage will be affected by making extra payments, and is compatible with Microsoft Excel 97 or later.
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