Mortgage Payoff Calculator
See how extra principal payments reduce your mortgage term and total interest cost. Enter your current loan balance, interest rate, remaining months, and any additional monthly principal you plan to pay. The calculator shows the new payoff date, the months and interest saved, and the total interest paid under both scenarios. Built by The Reed Corporation CPA team for homeowners evaluating whether to accelerate mortgage payoff versus investing the difference.
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Payoff vs. invest: the real comparison
Paying down a 6.75% mortgage early is equivalent to earning a guaranteed 6.75% after-tax return on that money — but only if you can’t deduct the mortgage interest. If you itemize and your marginal federal rate is 24%, your effective after-tax mortgage rate is approximately 6.75% × (1 − 0.24) = 5.13%. Compare that to expected returns on the alternative investment to decide which makes more financial sense.
For most homeowners who take the standard deduction, there’s no tax benefit to the mortgage interest, so the gross rate is the right comparison. A 6.75% guaranteed return beats most bond alternatives and matches a conservative equity return assumption after taxes and fees. At rates below 4%, the calculus often favors investing over prepaying.
The mortgage interest deduction is only available if you itemize, which requires total deductions to exceed the standard deduction ($16,100 single / $32,200 MFJ for 2026). Most homeowners with standard or mid-size mortgages don’t itemize and receive no federal tax benefit from mortgage interest.
Effect of extra payments on the amortization schedule
In the early years of a mortgage, most of each payment goes to interest because the balance is high. Extra principal payments have a disproportionate impact on total interest paid because they reduce the principal faster, which shrinks the interest accruing on every subsequent payment. A $300 extra payment in month 1 of a 30-year mortgage at 6.75% eliminates more total interest than $300 in extra payments in month 200 — the earlier the prepayment, the longer the compounding advantage lasts.