Mortgage loan amortization schedule
The Times had a story in Sunday’s paper about making extra payments on your loan.
Basically, if you make extra payments on your loan, you’ll reduce the amount of interest you’ll end up paying over the life of your loan.
A lot of interest, it turns out.
Which, in a way, is like earning interest on the money you save, instead.
“The savings can be staggering … ”
For example, someone with a $250,000, 6.5 percent loan written for 30 years, a monthly prepayment of $200 will save almost 8 years of payments and $97,614 in interest. In other words, when you prepay your mortgage, it is like earning the mortgage interest rate on those additional payments.
“In the $250,000 example, that would be a risk-free, guaranteed investment return of 6.5 percent.”
Do you want to see for yourself?
Here’s a spreadsheet you can download that does just that:
Mortgage loan amortization schedule (.xls)
This Excel spreadsheet was created by Jon Wittwer and the people over at Vertex42.com. I modified it, just a bit.
They have many excellent spreadsheets on their site, some that you can use online, without downloading. All are free, for personal use.
This spreadsheet can be used to see what your normal monthly loan payments will be. PLUS, you can add an extra amount to your monthly payment, to see what the results would be.
Quite impressive!
More: Is It a Good Idea to Prepay a Mortgage? - By Jay Romano, The New York Times
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