The First 5 Years of a Traditional Mortgage are Brutal...
In fact, the first 5 years of a traditional mortgage doesn't really inspire much hope because most of the payments you make go towards interest. Making mortgage payments and not seeing the balance go down is frustrating. (Thanks, Captain Obvious.)
What's even more frustrating is if you don't have tons of extra money to put towards the mortgage, it isn't in any hurry to go away either.
THE SYSTEM IS RIGGED AGAINST YOU BECAUSE BANKS KNOW THAT THE AVERAGE FAMILY CHANGES HOMES EVERY 5-7 YEARS AND THEY START THE 25 YEAR FIXED RATE CYCLE ALL OVER AGAIN.
How to Use the Home Equity Line of Credit Calculator
Here are a few things you should know before using the HELOC calculator:
Total new charges you expect to put on this line of credit per month, do not include your existing mortgage payment or HELOC interest charges. The calculator does this for you.
The current interest is 4.45% (Bank Prime +.50%). To be conservative, I would set the rate change (per year) at 0.5% (half of a percentage point). This may not happen, but it will illustrate that interest rate has very little to do with debt repayment.
Net Monthly Income:
The amount that you are currently paying per month. Please enter the amount you are actually pay, not the minimum payment. If you and your spouse are earning a net income of $7,000 per month, then put in that amount.
Payoff Goal (in months):
I would suggest that you start with a payoff goal of at least HALF of your existing mortgage amortization. As an example, if you have 20 years (240 months) left on your existing mortgage, I would put in 120 months (10 years) as your payoff goal.
Calculate Your Debt-Free Date Here:
Line of Credit Payoff Calculator
How long will it take to pay off your line of credit? Use this calculator to see what it will take to pay off your line of credit, and what you can change to meet your repayment goals.
Current balance: Current outstanding balance on your line of credit.
Payoff goal (in months): Your goal for paying off this line of credit. This is the number of months by which you would like to have completely paid off this line of credit balance.
Current monthly payment: The amount you are currently paying per month on this line of credit. Please enter the amount you actually pay, not the minimum payment. This amount is used to calculate how long it will take you to payoff your balance.
New charges per month: Total new charges you expect to put on this line of credit per month.
Rate change (per year): If you expect the interest to change in the next year, use this to indicate how much. For decreasing rates, enter negative numbers.
Interest rate (APR): The annual percentage rate for this line of credit.
Annual fee: Your annual fee for this line of credit.
Draw: Amount to draw from this line of credit.
Months from now: Number of months from now before your draws will occur.
Information and interactive calculators are made available to you only as self-help tools for your independent use and are not intended to provide investment or tax advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
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