How is my mortgage payment calculated?

Your monthly payment is calculated using the loan amount, interest rate, and loan term. The formula accounts for amortization, ensuring each payment covers both interest and principal. Property taxes and insurance are separate costs not included in this calculation.

How much can extra payments save me?

Even small extra payments make a big difference. Adding $200/month to a $300,000 mortgage at 6.5% saves over $65,000 in interest and pays off the loan 6 years early. The earlier you start making extra payments, the greater the impact.

Should I get a 15-year or 30-year mortgage?

A 15-year mortgage has higher monthly payments but a lower interest rate and dramatically less total interest paid. A 30-year mortgage offers flexibility — you can always make extra payments to pay it off faster while keeping the option of lower required payments if needed.

When should I refinance my mortgage?

Consider refinancing when rates drop 0.75-1% below your current rate, you plan to stay in the home long enough to recoup closing costs (typically 2-4 years), and your credit score has improved. Calculate the break-even point before committing.

Should I pay off my mortgage or invest the money?

If your mortgage rate is below 4-5%, investing historically provides better returns. If your rate is above 6%, paying it off provides a guaranteed return. Many in the FI community split the difference or prioritize the psychological freedom of being debt-free.

Resources

Mortgage Payoff Calculator

Your mortgage is likely your largest expense. See exactly how extra payments can save you tens of thousands in interest and shave years off your loan.

What If You Paid a Little Extra?

On a $300,000 mortgage at 6.5%, even small extra payments create massive savings. Drag the slider and watch the impact.

Slide to see the impact of extra monthly payments

Base payment: + extra

$0/mo $1,000/mo

Years Saved

yrs

Interest Saved

New Payoff

yrs

Original: 30 years New:

30 yrs

An extra saves you in interest

Calculate Your Mortgage Payoff

Enter your loan details and see how extra payments change your timeline.

Mortgage Calculator

Calculate your monthly mortgage payment including taxes, insurance, and HOA fees.

Home Price ($)

Down Payment ($)

Interest Rate (%)

Loan Term

Annual Property Taxes ($)

Annual Insurance ($)

Annual HOA Fees ($)

Monthly Payment

Total interest over years:

Principal & Interest

Property Taxes

Insurance

HOA

Pay Off Mortgage or Invest?

One of the most debated questions in the FI community. Explore both sides.

Pay Off the Mortgage

Guaranteed return

Paying off your mortgage gives you a guaranteed, risk-free return equal to your interest rate. No market volatility, no sleepless nights.

Eliminates your single largest monthly expense
Reduces your FI number by 25x your annual mortgage payment
Provides deep psychological peace and security
No market risk — your return is locked in

Best when: Your mortgage rate exceeds 5-6%, you value certainty over potential upside, or you are close to FI.

Invest Instead

~10% historical returns

Historically, broad market index funds have returned roughly 10% annually, which exceeds most mortgage interest rates.

Historical returns significantly exceed most mortgage rates
Maintains the mortgage interest tax deduction
Keeps your cash liquid and flexible for opportunities
Mortgage debt inflates away over time with fixed payments

Best when: Your mortgage rate is below 4%, you have a long time horizon, and you can stomach market volatility.

Split the Difference

Best of both worlds

Many in the FI community take the balanced approach: maximize tax-advantaged accounts first, then direct remaining surplus toward the mortgage.

Max out 401(k), IRA, and HSA first for tax benefits
Direct remaining surplus to extra mortgage payments
Hedges against both market downturns and high interest costs
Captures tax advantages while building equity faster

Best when: You are uncertain about market direction, want balance, or your rate is in the 4-6% gray zone.

The FI Angle

-$600K FI number

Paying off your mortgage dramatically reduces your FI number. If your mortgage payment is $2,000/month, eliminating it drops your required portfolio by $600,000.

$2,000/month mortgage = $24,000/year = $600,000 reduction in FI number
Could mean reaching financial independence years sooner
Fewer annual expenses mean a smaller portfolio sustains your lifestyle
The math is simple: eliminate the payment, eliminate the need to fund it forever

The bottom line: A paid-off home is one of the most powerful accelerators on the path to FI.