DIY Mortgage Acceleration
Do-it-yourselfers who are weary of yet another trip to the home improvement store may like this DIY project. It has the possibilities of increasing home equity just as quickly as a bath remodel or new deck.
You may have already built your own amortization schedule using a guide I posted earlier. And, you may have been figuring out how to accelerate your mortgage payoff by entering amounts in the monthly payment column that are higher than the standard payment. Just to make DIY mortgage acceleration really easy, I’ve created three schedules in one file:
- Original Amortization Schedule
- $100-a-month Accelerated Amortization Schedule (for disciplined DIYers who have committed to paying an extra $100 per month beginning with the very first payment)
- Real-life Accelerated Amortization Schedule (with semi-random extra-payment amounts based on financial life events such as 1) having extra $600 per month for 2 years between car loans from year 5 to year 7; 2) using $300 of a yearly tax refund 3) applying year-end bonuses, ranging from $100 to $2,100).
The mortgage-loan givens or assumptions for all three scenarios are:
- $200,000 mortgage loan
- 30-year fixed rate loan
- 6% interest rate
Here are the results of paying according to the Original, $100-a-month Accelerated, and Real-Life Accelerated Amortization Schedules:
Original (Use “edit,” “go to,” “ORIGINAL”)
- Number of Years for Payoff: 30 years
- Total Interest Paid: $231,676.38
- Total Payments Made: $431,676.38
$100-a-month Accelerated (Use “edit,” “go to,” “ACC”)
- Number of Years for Payoff: 24 years, 7 months
- Total Interest Paid: $182,537.97
- Total Payments Made: $383,234.81 (payments will be slightly less as last payment will not be a full payment)
Real-Life Accelerated (Use “edit,” “go to,” “Random”)
- Number of Years for Payoff: 21 years
- Total Interest Paid: $152,555.51
- Total Payments Made: $353,173.46 (payments will be slightly less but I didn’t want to change the flow of the amortization schedule)
You can download the file and enter information from your own life: your mortgage amount, your term, and your interest rate. Then, have fun figuring out how fast you can accelerate your mortgage payoff. If you decide to accelerate, make sure that your mortgage servicing company knows that the extra amounts you are paying each month are to reduce the principal.