Paying Off Your Mortgage How To Run The Numbers
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Paying Off Your Mortgage: How to Run the Numbers
Overview
Thinking about paying off your mortgage early? Whether you aim to be mortgage-free by the time your child starts college or need to eliminate your mortgage for retirement, Microsoft Excel can help you calculate an early payoff plan.Keywords
- Mortgage- Refinance
- Biweekly mortgage
Guide to Using Excel's NPER Function
If you have Microsoft Excel on your computer, you can use its NPER function to determine how quickly you can pay off your mortgage.
What is the NPER Function?
The NPER function calculates the number of payments required to pay off a loan based on the interest rate, payment amount, current loan balance, any balloon payments, and optionally, the annuity type.
Understanding the Annuity Type
The annuity type switch can be a bit complex. Setting it to 1 means payments are made at the beginning of the period (annuity due), while setting it to 0 or omitting it means payments are made at the end of the period (ordinary annuity).
Syntax of the NPER Function
Here's how you use it:
```
=NPER(rate, pmt, pv, fv, type)
```
Example Calculation
Let's say you want to calculate the number of $1,000 monthly payments needed to pay off a 9% mortgage with a $100,000 balance. Enter this formula in an Excel cell:
```
=NPER(.09/12, -1000, 100000, 0, 0)
```
The function will return 185.53, indicating approximately 185 full payments and a partial final payment. Note that the annual interest rate is divided by 12 to convert it into a monthly rate, and payments are shown as negative values (cash outflow), while the loan balance is positive (cash inflow).
Important Note
The NPER function often returns fractional values, meaning an additional fractional payment may be necessary after the last full payment.
By following these steps, you can effectively plan for an early mortgage payoff using Excel.
You can find the original non-AI version of this article here: Paying Off Your Mortgage How To Run The Numbers.
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