Mortgage Calculator – Pay your loan off EARLY!!

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I really want to help you pay your mortgage off early i want you to understand the power of compound interest and how you can get ahead of the curve there are several quotes attributed to albert einstein about compound interest one of them is compound interest is the eighth wonder of the world he who understands it earns it he who doesn’t pays it whether or not

Albert said that compound interest can work for you or against you in big ways i want to help you understand how compound interest is affecting you through your mortgage and how you can minimize its effects okay so let’s get started anytime you see an orange cell that’s an input everything else is calculated okay so what you want to do is call your mortgage company

Or go online and find the payoff value on your loan and you’ll put that here that’s the principle remaining let’s say it’s two hundred thousand then you put your annual interest rate here we’ll say it’s three point four nine percent but you fill them in with whatever yours actually is then if you have pmi just put that in here twenty bucks we’ll say you’re doing

It’s 20 bucks per month okay here you want to put your annual insurance and below that your annual property taxes that you pay on your house okay and then down here and cell 8 c 8 and d 8 you want to put the time remaining on on your loan so say you had a 30-year loan and you’ve paid on it for nine years in nine months and so that would leave you with twenty years

And three months left on your home so you would put that here okay and when you fill that out this number down here in red the red highlighted number here under total monthly payment it should be 1769 that should be approximately what you total monthly payment is okay now this is where albert’s words can be ringing in your ears as you look up this table you see

What you would have to pay in order to pay your loan off in this many years so for example if you were to pay to 2048 and 78 cents you pay your loan off in 15 years instead of 20 years and three months this is one of the main reasons why i wanted to make this spreadsheet available to you because this is something that really helped me to really gauge as i kind of

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See where i am here at this point and then to look up this chart and really see how just a little bit more money can really make a big difference on knocking years off of the loan so say that you just paid a hundred dollars more a month that would put you about here just 100 bucks more month you’re not that would not two years off of your loan you know and then

You really start looking at some of these other numbers you know well what if i could do 400 wherever that put me and you know and you look really fast and this would put your somewhere in this ballpark here so now you’re talking about you’d be around fourteen years so you’d not six years off your loan just by paying that extra $400 a month and so you know say

That you did get a 30-year loan and you have been working for ten years and working on it for ten years and and maybe now you’re at a different point in your life where you can afford a lot more in your monthly payment and so you know that’s where you can really go up this chart and really find a number that you’re comfortable with paying more each month so that

You can not not time off your loan and and and i really would encourage you to really use this part of the spreadsheet this is the like i said the main reason why i made it is so that a person can start here at the red this this this red row here and really look up and then basically in their heads you know just subtract the difference between this value and this

Value and that’ll tell you the additional principle that you’d have to pay in order to pay it off in this many years so you know then you could say well what if i what if i could do $600 more well what would that pitch at at which around somewhere in this this area so you’d be over you’re talking somewhere between 11 and 12 years so and you can do that until you

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Find an area that’s that’s comfortable for you in our case let’s just for an example let’s just say that you’ve you’ve done that and and and you’ve seen these values and you say okay i’m approximately 3000 a month is what i can do for a mortgage payment so that would put you in this range here eight years now let me point something out to you real quick you see

This twenty seven eighty now when i changed this to nine you’ll notice that will slightly change and the reason for that is these loan years assume zero months so two years and zero months three years and zero months for years and zero months etc the only way that that’s overridden is by changing this value here so let’s just run through another quick example so

You see this so if i change this to zero you see how eight years is at three thirty ten three thousand ten so now if i change this to eight that remains a staying it same at three thousand ten so the only way that that value of the blue cell is gonna be overwritten as if you change this months to it something other than zero so let’s just say you know if you made

It one month then it would be this value here it won’t affect any of these others and so the reason why i did it that way is so that you could quickly get an approximation of where you are in your comfort level as far as i’m totally payment and then you can fine tune it with this month about you here so say you’re you’ve gone to the fine tuning process a little

Bit and you’ve really kind of honed the number in on something that you’re comfortable paying more each month and by the way you can either look at this number if you want to think about it and in terms of how much additional money i would have to pay each month towards my principal or what my total monthly payment would be this number here this 1220 is just this

Number twenty nine eighty nine minus 1769 so you you can either think of it either way the total monthly payment or additional principal it’s it is the same thing pretty much okay so saying that you’ve gone through this process and you fine-tune it a bit to where you know you’ve said okay eight month eight years and zero months twelve forty one additional that’s

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A little bit more than i want to pay that’s eight years in two months it’s approximately twelve hundred dollars i can pay a little bit more than that let’s try eight years in one month okay twelve twenty all right that that’s pretty good number right there i feel comfortable with that i think i’d like to to do that i think i’d like to pay that additional amount

Each month and so what that’ll mean is that you will pay your loan off in eight years and one month instead of twenty years and three months and in the process you will have saved this number right here so in this case it would be forty nine thousand dollars imagine that forty nine thousand dollars that’s not going to the bank it’s going to your pocket this is

Additional information if you want it this is called the amortization schedule so by the way here’s a an orange cell so if you do want to use the amortization schedule just what you do is you put in your the date of your next payment here and this will outline each payment of those payments in your desired remaining years so like in this case would be eight years

In one month so it’ll outline each payment within those eight years and one month so it would be basically nineteen seven payments and you can just watch your balance fall all the way down to zero and it’ll tell you you’re your principal how much japan in principle each month and it changes it goes up up so much japan in interest each month it goes down and when

Your total monthly payment is which always it stays the same so that’s there if you want it okay i hope you enjoyed this video please subscribe so you can get notified when i post more videos if you’d like to purchase the spreadsheet please see the link in the comment section

Transcribed from video
Mortgage Calculator – Pay your loan off EARLY!! By Spreadsheets 4 Life