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:

Current Monthly principal

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:

My Original loan information

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

About the Author:

Evan is the owner of My Journey to Millions which was started to track his journey from a broke debt ridden law school graduate to building a positive balance. Need more Evan? Follow him on Twitter, Contact him or get new posts directly to your email

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