Extra payment and early payoff calculator

Why extra payments work so well early

In the first years of a 30-year mortgage at 6.5%, most of each payment is interest. Every extra dollar you send goes straight to the balance, so next month's interest is charged on a smaller number. The effect compounds, which is why $300 a month on a $520,000 loan saves far more than $300 times the months you pay it.

How to make extra payments correctly

• Mark the payment as additional principal in your servicer's online portal or on the coupon. Otherwise it may be held as a future payment.
• Check your note for a prepayment penalty. Most conventional, FHA and VA home loans have none, but some non-QM and investor loans used by foreign buyers in Florida do.
• Your monthly payment does not drop when you pay extra. If you want a lower payment after a large lump sum, ask the servicer about a recast. Many charge a fee of a few hundred dollars.

Florida costs that stay the same

Paying off early cuts interest only. Property tax, homeowners insurance and flood insurance keep coming, and once the loan is gone you pay them directly instead of through escrow. Many Florida owners keep a cash reserve for hurricane deductibles before sending extra money to the mortgage, since that money is hard to get back out of the house without a new loan.

When the loan is paid off, Florida law gives the lender 60 days to send a release of the mortgage for recording. Check the county records afterwards to confirm it was recorded.