Mortgage Calculator
Annual Cost Breakdown
Year | Annual Principal | Annual Interest | Annual Property Tax | Annual Insurance | Annual Maintenance | Annual PMI | Annual HOA | Annual Other Costs | Annual Total |
---|
Monthly Cost Growth
Monthly Cost Growth
Year | Monthly Mortgage | Monthly Property Tax | Monthly Insurance | Monthly Maintenance | Monthly PMI | Monthly HOA | Monthly Other Costs | Monthly Total |
---|
Amortization Chart
Amortization Schedule
Date | Principal Paid | Interest Paid | Extra Payment | PMI | Remaining Balance |
---|
Tax Analysis Chart
Tax Analysis
Year | Mortgage Interest | Property Tax | SALT Deduction | Other Itemized Deductions | Total Itemized Deductions | Standard Deduction | Deduction Benefit | Tax Savings |
---|
- Tip 1: If your mortgage interest rate is higher than the interest rate you can earn from low-risk investment options, like certificates of deposit (CDs), it’s generally better to make extra mortgage payments rather than investing.
This approach results in a net positive interest benefit, as the amount you save on mortgage interest will likely outweigh the interest you would earn through investing in CDs or similar low-risk options. - Tip 2: If your mortgage interest rate is lower than the interest rate you can earn from low-risk investments like CDs and your down payment is less than 20%, it’s important to consider Private Mortgage Insurance (PMI) before deciding to invest.
Extra payments can help you reach 20% equity faster, allowing you to request the cancellation of PMI earlier.
Use our calculator to compare the total amount of PMI you’ll pay with and without extra payments. The calculator will also show how much interest you’ll save by making extra payments.
After that, use our savings calculator to check the interest you could earn after taxes (since the interest earned on CDs is taxable) by investing your extra payments in a CD ladder or other low-risk investment options.
Finally, compare the combined savings from PMI cancellation and reduced mortgage interest against the interest you would earn from investments to determine whether making extra payments or investing in CDs is the better option. - Tip 3: If your mortgage interest rate is lower than the interest rate you can earn from low-risk investments like CDs and your down payment is more than 20%, it is often better to invest the extra payments in CDs, CD ladders or other low-risk investment options.
In this case, you’ll likely earn a better return on your money through interest from CDs while continuing to make your regular mortgage payments. - Tip 4: When considering investing the funds that could be used for extra mortgage payments, it’s generally recommended to opt for low-risk options. This is because these funds might need to be used for extra payments on your mortgage, and high-risk investments can lead to potential losses.
CDs are low-risk investment options since they are FDIC-insured up to $250,000 per depositor, which means the risk of losing your money is extremely low.
CD laddering is a strategy where you divide your investment across multiple CDs with different maturity dates. This allows you to access funds more regularly as each CD matures at staggered intervals, reducing the need to close a long-term CD early, thereby avoiding potential penalties.
If savings interest rates drop below your mortgage interest rate, you can use the money from maturing CDs to make extra mortgage payments. - Tip 5: PMI (Private Mortgage Insurance) is automatically canceled when your loan-to-value (LTV) ratio reaches 78%, as long as you're up to date with payments. You don’t have to wait for automatic cancellation. You can request PMI cancellation earlier, once your LTV reaches 80%. This can save you money on unnecessary PMI payments.
Our mortgage calculator shows the estimated PMI stop date, giving you a clearer picture of when you could reach 80% LTV based on your current payments. This allows you to see when you might be eligible to request PMI cancellation, potentially saving you money before the automatic cancellation at 78% LTV.
Additionally, if your home's value has appreciated, you may reach 20% equity sooner than expected. In this case, you might need to request a home appraisal to verify the increased value before requesting PMI cancellation. - Tip 6: When considering how much you save by making extra mortgage payments, it's important to factor in the concept of opportunity cost. Here’s how you can think about it:
Compare Savings vs. Investment Returns:
Suppose you make $100 in extra payments toward your mortgage each month. While this reduces the interest you pay on your mortgage, you should also consider how much you could have earned by investing that same $100.
To do this, calculate how much you would earn from investing $100 monthly in a low-risk investment option (like a CD or high-yield savings account). Use our savings calculator to estimate the after-tax interest earnings of this investment.
Then, compare the after-tax interest earnings with the amount of interest saved on your mortgage due to extra payments. This will give you a clearer picture of how much you’re truly saving by making extra payments.
Spending Habits Matter: This comparison assumes that you would otherwise invest the money that could have gone toward extra payments. However, if you tend to spend that extra money on other expenses (instead of saving or investing it), the interest saved on your mortgage (as displayed in the calculator) is the actual amount you’re saving.
Tax Considerations: Don’t forget that interest earned on investments like CDs is taxable, so always compare the after-tax returns of investments with the mortgage interest savings. - Tip 7: Accelerated bi-weekly payments can help shorten your loan term and reduce the total interest you pay, as shown in our calculator. However, many banks may charge additional fees to set up an accelerated bi-weekly payment plan.
If you'd like to avoid these fees, you can achieve a similar effect manually by making extra payments each month. Here’s how:
Take your monthly mortgage payment (for example, $2400) and divide it by 12. In this case, that equals $200.
By making an extra payment of $200 each month in addition to your regular mortgage payment, you will essentially make the equivalent of one full extra payment each year. This approach is similar to accelerated bi-weekly payments, as it reduces the principal balance faster and saves you interest over the life of the loan, though it’s not exactly the same.
Note: While this manual method offers similar benefits, the precise interest savings and reduction in loan term may differ slightly from a true bi-weekly plan, where you make 26 half-payments per year (equivalent to 13 full payments). - Tip 8: Itemizing Deductions: Mortgage interest can only be deducted on your tax return if you choose to itemize your deductions rather than taking the standard deduction. This is beneficial only if your itemized deductions (including mortgage interest, property taxes, state and local taxes (SALT), charitable donations, medical expenses exceeding 7.5% of your adjusted gross income (AGI), and qualified education expenses, among others) are higher than the standard deduction.
Standard Deduction Limits: For 2024, the standard deduction is:
$13,850 for single filers,
$27,700 for married couples filing jointly, and
$20,800 for head of households.
You should compare the total of your itemized deductions with these amounts to decide whether itemizing is more advantageous.
You can check the stacked column chart or monthly breakdown table in our calculator to get an idea of how much interest you will pay each year, helping you estimate potential deductions.
Loan Limits for Mortgage Interest Deduction: As of 2024, you can deduct interest on mortgage loans up to $750,000 if you are a single filer or married filing jointly. If you are married filing separately, the limit is $375,000. This applies to loans taken out after December 15, 2017. For loans taken out before that date, the limit is $1 million (or $500,000 for married filing separately). Interest on loans above these limits is not deductible.
Consult Updated Tax Rules: These tax rules can change over time, so be sure to check the IRS guidelines or consult a tax professional for the latest rules and limits for the year you are filing.
Other Important Considerations: You can also deduct points paid on a mortgage (in some cases) which may further increase the value of itemizing. - Disclaimer: The information and tips provided in this mortgage calculator are intended for general informational purposes only and should not be considered as financial, tax, or legal advice. While we strive to provide accurate and up-to-date information, individual circumstances can vary, and certain rules or rates may change over time.
Before making any decisions regarding your mortgage, extra payments, Private Mortgage Insurance (PMI) cancellation, investments, or any other financial decision, we strongly recommend consulting a qualified financial advisor, tax professional, or legal expert to understand how these tips apply to your specific situation.
The mortgage calculator results are estimates and should be used as a guide, not a guarantee of actual savings. The impact of extra payments, interest savings, and investment returns can vary based on market conditions, tax laws, and individual financial circumstances.
By using this calculator, you agree that the creators of this tool are not responsible for any decisions you make based on the information provided.
Mortgage Calculator Disclaimer
This mortgage calculator is provided for informational and educational purposes only. The results are estimates based on the information you provide and should not be considered as financial advice or a guarantee of mortgage terms.
- The calculations are approximations and may not reflect all costs associated with your specific mortgage.
- Actual loan terms, payments, and rates are subject to change and may differ from the estimates provided.
- This calculator does not account for all possible fees, taxes, or other costs that may be associated with a mortgage.
- The amortization schedule and other projections are based on fixed rates and do not account for adjustable-rate mortgages or potential changes in interest rates.
- Property values, tax rates, and insurance costs may change over time, affecting the accuracy of long-term projections.
- The impact of refinancing, prepayment penalties, or other loan-specific terms is not considered in these calculations.
- This tool does not guarantee loan approval or specific terms from any lender.
We strongly recommend consulting with a qualified financial advisor or mortgage professional before making any decisions regarding a mortgage or other financial products. Always review and understand the terms of any loan agreement before signing.
By using this calculator, you acknowledge that you understand these limitations and agree that we are not responsible for any financial decisions made based on the results provided.