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— Slide 8: Making Large Upfront Payments —

Let's Take This One Step Further

Let's say you made 7 consecutive $5,000 lump sum payments each year at 12 months apart;

In other words, you made a lump sum payment for $5,000 on Month 1; another lump sum payment for $5,000 on Month 13; and the final lump sum payment of $5,000 on Month 73.

How much interest would this save you?

$100,000 Mortgage
30 Year Term - 6% APR
Monthly Lump Sum Payments
$0
 7 - $5,000
Total Payments $215,838.19 $107,319.54
Total Interest Paid $115,838.19 $41,785.34
Total Principal Paid $100,000.00 $100,000.00
Total Interest Saved $74,052.85
Mortgage Payoff Time 30 Years 14 Years

$200,000 Mortgage
30 Year Term - 6% APR
Monthly Lump Sum Payments
$0
 7 - $5,000
Total Payments $431,676.38 $349,775.27
Total Interest Paid $231,676.38 $133,695.03
Total Principal Paid $200,000.00 $200,000.00
Total Interest Saved $97,981.35
Mortgage Payoff Time 30 Years 20.9 Years

The Magic is Paying Up-Front

The goal is to get more of your monthly payment paying off the principal. By making large lump sum payments up-front, you can reach your mid-point must quicker.

In our example above, we were able to meet the mid-point as follows:

$100,000 loan: 5.2 years (vs. 18.6 years with no lump-payments)
$200,000 loan: 9.3 years (vs. 18.6 years with no lump-payments)

mid-point is where your mortgage payment begins to pay more on principal than on interest

Download this spreadsheet to run your own numbers.

— FREE Download (MS Excel Worksheet)

You can enter lump-sum payments to analyze your payoff terms and interest savings

 

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Home Equity Application

FAST Mortgage Payoff

  • [view]Introduction
  • [view]About Your Mortgage
  • [view]SL1: Review
  • [view]SL2: Amortization
  • [view]SL3: Interest Paid
  • [view]SL4: Paying Extra
  • [view]SL5: Acc Types
  • [view]SL6: Which Option
  • [view]SL7: Pay Upfront
  • [view]SL8: Making It Big
  • [view]SL9: Get $$$
  • [view] Mortgage Payoff Tips
  • [view] About MMA Software
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