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Interest Only Mortgage Acceleration Calculator
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Interest Only Mortgage Acceleration Calculator

Understand how you can ​apply mortgage acceleration to an interest only mortgage​​. Our calculator demonstrates how mortgage acceleration (paying more than the required mortgage payment) reduces your total interest expense during the interest only period and lowers your principal mortgage balance at the end of the period. Applying mortgage acceleration to an interest only mortgage also allows you to offset the potential increase in your monthly mortgage payment when the mortgage converts into an adjustable rate mortgage at the end of the interest only period. Our interest only mortgage acceleration calculator enables you to evaluate either a fixed monthly payment (that exceeds the required monthly payment) or a fixed amount of monthly overpayment

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When you provide your personal info we may connect you with mortgage acceleration program providers. You can accelerate your loan on your own without paying a third party but these providers automate the process for a fee
 
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Outputs
With No Acceleration
 
Your required monthly mortgage payment during the initial interest only period
 
The amount of interest expense during the initial interest only period. With an interest only mortgage, your monthly mortgage payment is 100% interest
 
Your mortgage balance at the end of the initial interest only period. With an interest only mortgage you do not pay down any principal on your mortgage so the mortgage balance does not change
 
With Acceleration
The average monthly mortgage payment you intend to make during the initial interest only period, based on making a fixed amount of overpayment every month. If your you make the same monthly overpayment, your monthly mortgage payment will go down a little every month Monthly mortgage payment you intend to make during the initial interest only period, including overpayment
 
The amount of interest expense during the initial interest only period, when you overpay your mortgage
 
Reduction in interest expense during the initial interest only period when you overpay your mortgage as compared to interest expense when you do not overpay. Your overpayment results in lower interest expense during the interest only period because you pay down the principal balance of your mortgage
 
Your mortgage balance at the end of the initial interest only period, when you overpay your mortgage
 
Reduction in your mortgage balance at the end of the initial interest only period when you overpay your mortgage as compared to the mortgage balance when you do not overpay. Your overpayment reduces the principal balance of your mortgage
 
 
Thank you for submitting your calculation. We may provide your information to a mortgage acceleration program provider. Continue to use the calculator and perform as many calculations as you like as your contact info is only submitted once.
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Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
 
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Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
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Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
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Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
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Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
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Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
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FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
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Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here for more information on rates and product details.
While we pride ourselves on the quality and breadth of the FREEandCLEAR mortgage calculators please note that they should be used for informational purposes only. Our calculators rely on assumptions by us and inputs and assumptions provided by you, which may be inaccurate. The outputs from our calculators are estimates only and should not be used as the sole basis for making any financial decisions. Always consult multiple financial professionals when determining the mortgage size and program that is appropriate for you.

Mortgage Acceleration for an Interest Only Loan

1

Benefits of Accelerating an Interest Only Mortgage

The main benefits of applying mortgage acceleration to an interest only mortgage are that you can reduce your required mortgage payment during the interest only period of the loan and also help manage the increase in payment when the loan converts to an amortizing mortgage and the borrower is required to start paying principal. Because your required monthly payment during the interest only period of the loan is based on your outstanding mortgage balance, when you accelerate your loan and reduce your loan balance you also reduce your required monthly payment.  The more you accelerate your loan, the lower the required monthly payment.  Additionally, if you do not accelerate an interest only mortgage your monthly mortgage payment usually increases significantly when the borrower is required to start paying principal in addition to interest.  Applying mortgage acceleration during the interest only period helps to offset the potential jump in payment when the loan amortizes because your new payment is based on a lower mortgage balance.

2

You Can Accelerate an Interest Only Mortgage for Free

You should not have to pay any special fees to accelerate an interest only loan.  Some banks and companies offer programs that charge borrowers to implement a mortgage acceleration; however, you can accelerate your interest only mortgage for free.  Most mortgage acceleration programs offer borrowers little or no value and perform a function that borrowers can do on their own for no cost.  Additionally, many companies providing mortgage acceleration programs have engaged in fraud in the past.  To implement mortgage acceleration add the amount by which you want to overpay your loan to your mortgage payment and indicate to your lender that the extra funds are applied to your principal mortgage balance.  For example, if your required mortgage payment is $1,200, make a payment of $1,500 and let the lender know that the extra $300 goes to paying down your loan balance.  

3

How and When You Can Accelerate an Interest Only Mortgage

Borrowers can accelerate their mortgage by any amount at any point over the life of their loan.  With an interest only mortgage, accelerating your loan during the interest only period provides added benefits but borrowers can continue mortgage acceleration when the loan starts to amortize.  Additionally, borrowers can start and stop mortgage acceleration when they want to and adjust the amount by which they overpay their mortgage.  For example, borrowers that receive a large annual bonus may decide to make one significant extra payment per year while other borrowers may decide to accelerate their loans monthly or every other month.  Borrowers have flexibility to apply mortgage acceleration in the way that best meets their financial priorities.  

More FREEandCLEAR Mortgage Resources

Mortgage Guides

How to Apply Mortgage Acceleration to an Interest Only Mortgage

Review our in-depth explanation of how you can apply mortgage acceleration to an interest only mortgage to reduce your required mortgage payment, cut the length of your mortgage and save money on total interest expense over the life of your loan.

Resources

Interest Only Mortgage Rates

Review interest only mortgage rates for leading lenders in your area based on interest only period, loan-to-value (LTV) ratio and other inputs.  Comparing interest only mortgage rates from multiple lenders is the best way to find the mortgage that is right for you

Programs

Interest Only Mortgage Overview

Review our comprehensive overview of how an interest only mortgage works including key program terminology, reasons to select and interest only mortgage and informative examples

Resources

Mortgage Expert Insights

Money and time-saving advice that addresses a wide range of mortgage topics from an expert with over forty years of industry experience

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By clicking "GET FREE QUOTES," you authorize selected lenders and FREEandCLEAR to contact you using the information you provided. This authorization overrides any previous registrations on federal, state, or private Do Not Call registries or any private solicitation preference you previously expressed. You agree that lenders may use automatic dialing systems to make calls to any phone number entered, even to a cell phone or other service for which the called party is charged. You understand that consent is not a condition of purchase.