Mortgage payoff calculator

By Allstate

Last updated: January 1

Use the Allstate calculator to get an idea of how much you’d have to increase your payments to shorten your loan term.

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Should you pay off your mortgage early?

Whether you should pay off your mortgage early depends on your financial picture and what your goals are, says U.S. News. There may be good reasons – and not so good reasons – to shorten your loan term that are worth considering.

Pros: Once you no longer have to make sizable monthly payments, you could allocate more money into other investments in the long run – like retirement, college savings or traveling. Plus, you might save thousands on your interest rate over the life of the loan.

Cons: In the short run, you’ll have to spend more on your mortgage. The savings on your interests may not stack up against other investments, either. Also, some lenders penalize you for paying off your mortgage early.

Ways to pay off your mortgage early

If you have a 30-year mortgage, you may be curious if there are ways you can trim that time down, and by how much, without increasing payments too much. Luckily, there are options you can weigh carefully, depending on your situation.

Make extra payments early in the loan term

Increasing your payments each month could be the way to go. For instance, you might simply round up your monthly payments to make them even, says U.S. News. Just make sure to speak with your lender to see how they treat extra payments.

Arrange biweekly payments

Cutting your monthly payment in half and making bi-weekly payments instead could amount to 13 months’ worth of mortgage in twelve, according to Bankrate. Plus, it could save you on interest. Make sure your lender is okay with them.

Make extra payments toward the principal

A large part of your monthly mortgage payments goes toward the principal and interest. One way to pay off your loan faster is by making extra payments to the principal only, says Forbes. Let your lender know if you decide to go this route, so that extra payments aren’t going toward the interest. Doing this may save you tens of thousands of dollars, according to Bankrate.

Make lump sum loan payments

It’s called “mortgage recasting,” according to Bankrate. The idea is a borrower makes a large payment – lump sum – on the principal balance. Then you’ll have a new balance, and your loan will be updated accordingly. In short, this’ll help lower monthly payments and the interest you pay over the entire loan. Typically, a minimum of $5,000 is required to recast, says Forbes. The fee is usually only a few hundred dollars. Note, however, that FHA and VA loans can’t be recast.

Mortgage payoff calculator inputs

To use the calculator, you’ll first enter information about your current loan. The calculator will then crunch the numbers and give you an idea of how extra monthly payments could help shorten your loan term. The information you enter breaks down like this:

  • Current loan balance – the amount of money you still owe on your loan
  • Remaining term – how many months it’ll take to pay off your loan, given your current monthly installments
  • Interest rate – the percentage of the principal
  • Extra payment start date – the date you'll start paying extra on your monthly payments
  • Target payoff date – the date you hope to have finally paid off the loan

The calculator allows you to play around with the dates, so that you get an idea of how soon you can pay off the loan without breaking the bank.

What about refinancing?

Refinancing is when you replace your current mortgage with a new one. It could mean better, shorter loan terms or help you to take out equity on your house. The most common reason homeowners refinance is to get a lower interest rate, according to Forbes.

But, depending on your situation, refinancing your mortgage may not be the best way to pay off your home faster, warns Bankrate. If you refinance with a shorter term, your monthly payments may go up since they’re not stretched out over a longer term. Plus, money that could’ve gone toward paying off other debts would now be tied up in the house.

Instead, increasing your monthly payments on your own might be a better way to pay the loan off faster. That’s because you still have the option of resuming the same smaller monthly payments if you become financially strained.

Additionally, you could always shop around for a better home insurance rate. That way, you can free up a little more money to go toward extra payments on the principal, as mentioned earlier.