Mortgage Calculator
Calculate mortgage payments, compare refinance vs. extra payments, and see how extra payments save thousands and shave years off.
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These calculators provide estimates for educational purposes only. Results are not guaranteed and should not be treated as financial advice. Always consult a qualified professional before making major financial decisions.
A 30-year mortgage at 6.5% on a $400,000 home means you pay $510,000 in interest alone -- more than the house itself. Adding $200/month cuts the interest to $340,000 and shaves 9 years off the term. Refinancing from 6.5% to 5.5% (with $6K in fees) saves $63,000. The right move depends entirely on how long you plan to stay in the house.
Read more - how it works, tips & FAQs
How to use this calculator
- Enter your current mortgage balance, interest rate, and remaining term.
- Compare two strategies: making extra monthly payments vs. refinancing to a lower rate.
- Input the refinance closing costs and new rate to see the break-even month.
- See a year-by-year comparison showing total interest saved under each strategy.
How to calculate this by hand
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ – 1]
M = monthly payment, P = principal (loan amount), r = monthly interest rate (annual rate ÷ 12), n = total number of payments (years × 12). This is the standard amortization formula — the same one your bank uses to generate every statement.
Worked example: $300,000 mortgage at 6.5% over 30 years
- Convert annual rate to monthly: r = 6.5% ÷ 12 = 0.005417
- Total payments: n = 30 × 12 = 360
- Plug into formula: M = 300,000 × [0.005417(1.005417)^360] ÷ [(1.005417)^360 – 1]
- (1.005417)^360 ≈ 6.9761
- M = 300,000 × [0.005417 × 6.9761] ÷ [6.9761 – 1]
- M = 300,000 × 0.037786 ÷ 5.9761
- M = 300,000 × 0.006323 ≈ $1,897
Answer: Monthly payment = $1,897 (principal + interest). Total paid over 30 years = $682,920. Total interest = $382,920 — more than the original loan.
$350K Mortgage -- Extra Payments vs. Refinance
- Mortgage: $350,000 at 6.75% with 28 years remaining
- Extra payment option: $250/month additional
- Refinance option: 5.75% with $7,000 in closing costs
- Extra payments save: $72,000 in interest, 8 years faster payoff
- Refinance saves: $58,000 in interest, break-even in 18 months
- Winner: extra payments unless you plan to sell within 5 years
Result: Extra payments win by $14,000 over refinancing -- and you do not need to pay $7K upfront or qualify for a new loan.
Tips
- Recast instead of refinance if you have a lump sum: A mortgage recast lets you make a lump-sum payment toward principal and have your payment recalculated based on the lower balance. It costs $150-$300 vs. thousands for a refinance. Most lenders allow it after you have made 6+ payments.
- Biweekly payments = one extra payment per year: Switching to biweekly payments (half your monthly payment every 2 weeks) results in 26 half-payments = 13 full payments per year. That one extra payment annually on a $300K loan at 6.5% saves $54,000 and shaves 4.5 years off the term.
- Check if your lender applies extra payments correctly: Some lenders hold extra payments in a suspense account and apply them like future payments. You must explicitly instruct them to apply it to the principal balance. Check your statement each month to verify.
- Do not pay down a sub-4% mortgage early: If your mortgage is at 3-4% (common for 2020-2022 buyers), extra payments are mathematically worse than investing. A 4% mortgage costs $4/year per $100 borrowed. The S&P 500 averages 10%. Invest the difference.
Common mistakes to avoid
- Refinancing every time rates drop - Each refinance costs 2-5% of the loan amount in fees. If you refinance from 6.5% to 6% and save $100/month but pay $7K in fees, your break-even is 70 months. If you sell in 5 years, you lost money. Only refi if you will hold past the break-even.
- Extending back to 30 years when refinancing - If you are 8 years into a 30-year mortgage and refinance to a new 30-year, you reset the clock to 30 years. Even at a lower rate, you may pay more total interest. Consider a 20-year or 15-year refi instead.
- Paying down mortgage instead of maxing retirement - A mortgage at 6.5% costs $6.50/year per $100 borrowed. A 401(k) match is a 100% return. Max your 401(k) match first, then emergency fund, then consider extra mortgage payments.
Refinance Break-Even: When a Lower Rate Actually Saves You Money
| New Rate | Monthly Savings | Closing Costs | Break-Even | Verdict if Selling in 3 Yr |
|---|---|---|---|---|
| 6.0% (from 6.5%) | $104 | $7,000 | 67 months | Lose $3,264 |
| 5.5% (from 6.5%) | $208 | $7,000 | 34 months | Lose $176 |
| 5.0% (from 6.5%) | $312 | $7,000 | 22 months | Gain $912 |
| 4.5% (from 6.5%) | $416 | $7,000 | 17 months | Gain $2,000 |
FAQ
What is the break-even point on a refinance?
Divide total closing costs by monthly savings. If closing costs are $6,000 and you save $150/month, break-even is 40 months. If you plan to stay less than 40 months, the refinance loses money.
Should I pay PMI or put 20% down?
PMI (private mortgage insurance) costs 0.5-1% of the loan amount annually. On a $300K house with 10% down, PMI is about $125/month. Putting 20% down saves PMI but delays homeownership. Run both scenarios in the affordability calculator.
Does paying extra on my mortgage reduce my tax deduction?
Yes -- mortgage interest is tax-deductible if you itemize. Paying down principal reduces future interest, which reduces your deduction. For most people under the standard deduction ($29,200 married filing jointly in 2026), this does not matter.
Related resources
- Mortgage Prepayment Calculator Guide - See how extra payments save thousands in mortgage interest.
- What You Can Afford with a Home Affordability Calculator - Use a home affordability calculator to find your real price range.