# Calculating Micro Prepayments on my Mortgage

//Calculating Micro Prepayments on my Mortgage

# Calculating Micro Prepayments on my Mortgage

For the past few years, I have rounded up my mortgage payment to the nearest \$100.  It isn’t a ton of money, and to be honest I don’t even give it much thought.  Normally I just throw away the statement without even opening it, and then last week for whatever reason I actually opened it.  I saw the remaining balance and I began to actually think about those few extra dollars.  Not because it is a lot, but rather, on a level of curiosity.  Am I really saving that much interest? Did it really change my amortization table?  Should I continue to do it even if it doesn’t make mathematical sense because the amount is so low? etc. etc.  As I write this introductory paragraph, I have no clue the difference what my mortgage amortization table is supposed to look like and what it actually looks like today.

## My House Mortgage Information

A few years back I provided a pretty detailed account of my home buying experience.   It was an experience I didn’t much enjoy, however, I can look back today and say I really do like where The Wife and I ended up and the area we have now raising our children.  I wasn’t so confident when I bought our place in 2013.

### How are 30 Year Fixed Mortgages Calculated?

I assume most people do not even think about it but a traditional 30 year year fixed mortgage provides an amortization schedule wherein a certain portion of your level payment goes to interest and a certain portion goes to principal.  The interest to principal ratio changes as you get deeper into the life of the loan. There are other ways a note could be calculated but those are usually of no concern for someone with a 30 year fixed note – they are/were of major concern for those who used or are still using 5, 7 or 10 year ARMs (adjustable rate mortgages).

On January 18, 2013 I bought my home (\$485,000 price) with the following note:

• 30 year fixed
• \$388,000 Borrowed
• 3.375% Rate (I am pretty sure I got in at near the historical low)

This provides me with an amortization schedule of:

YearTotal
Payments
Principal
Paid
Interest
Paid
Ending
Principal
Balance
\$388,000.00
1\$20,583.96\$7,605.92\$12,978.04\$380,394.08
2\$20,583.96\$7,866.61\$12,717.35\$372,527.47
3\$20,583.96\$8,136.26\$12,447.70\$364,391.21
4\$20,583.96\$8,415.13\$12,168.83\$355,976.08
5\$20,583.96\$8,703.59\$11,880.37\$347,272.49
6\$20,583.96\$9,001.91\$11,582.05\$338,270.58
7\$20,583.96\$9,310.46\$11,273.50\$328,960.12
8\$20,583.96\$9,629.62\$10,954.34\$319,330.50
9\$20,583.96\$9,959.68\$10,624.28\$309,370.82
10\$20,583.96\$10,301.07\$10,282.89\$299,069.75
11\$20,583.96\$10,654.16\$9,929.80\$288,415.59
12\$20,583.96\$11,019.35\$9,564.61\$277,396.24
13\$20,583.96\$11,397.06\$9,186.90\$265,999.18
14\$20,583.96\$11,787.72\$8,796.24\$254,211.46
15\$20,583.96\$12,191.76\$8,392.20\$242,019.70
16\$20,583.96\$12,609.66\$7,974.30\$229,410.04
17\$20,583.96\$13,041.87\$7,542.09\$216,368.17
18\$20,583.96\$13,488.92\$7,095.04\$202,879.25
19\$20,583.96\$13,951.28\$6,632.68\$188,927.97
20\$20,583.96\$14,429.49\$6,154.47\$174,498.48
21\$20,583.96\$14,924.08\$5,659.88\$159,574.40
22\$20,583.96\$15,435.65\$5,148.31\$144,138.75
23\$20,583.96\$15,964.72\$4,619.24\$128,174.03
24\$20,583.96\$16,511.94\$4,072.02\$111,662.09
25\$20,583.96\$17,077.92\$3,506.04\$94,584.17
26\$20,583.96\$17,663.32\$2,920.64\$76,920.85
27\$20,583.96\$18,268.75\$2,315.21\$58,652.10
28\$20,583.96\$18,894.96\$1,689.00\$39,757.14
29\$20,583.96\$19,542.62\$1,041.34\$20,214.52
30\$20,586.01\$20,214.52\$371.49\$0.00

Annually doesn’t exactly provide me with the information I am looking for:

So, my current balance should be \$353,826.50 (month 51 of a mind blowing 360 month note).

## Comparing my Original Calculated Mortgage and my Actual Mortgage Balance

Taking a look at my current outstanding balance we have:

So we are at \$352,925.08 rather than \$353.826.50.  Honestly, before writing this post I thought that difference would be larger.  I am pretty sure I could use those micro payments in a better way, but there is no guarantee I actually do it.  So, despite taking 500 words to learn that I could probably do something better with these tiny add-on payments, I am going to continue doing what I have been doing.

By | 2017-05-30T22:17:42+00:00 April 24th, 2017|Debt|0 Comments