The easiest way to find out what is owed on your mortgage is to check the most recent statement you've received from your lender or access your lender's online banking system. If you don't have access to that information for whatever reason, you can use an outstanding mortgage balance calculator tool or manually apply a mortgage balance formula based on the interest rate, the amount you borrowed and the payments you've made.
TL;DR (Too Long; Didn't Read)
Find out your outstanding mortgage balance from your lender if possible. If that isn't an option, or you want to double-check the numbers, use a mortgage payoff calculator tool or formula.
Understanding Your Mortgage Balance
When you borrow money to pay for a home or other property, that initial amount borrowed is referred to as the mortgage principal. That's not the only amount you have to pay back to the bank, however, since your lender will also charge interest to make money over time, according to the terms of your loan agreement.
When you first buy your house, you'll mostly be paying interest with each mortgage payment, because the interest is assessed based on the total amount owed, and the principal is still largely paid off at that point. Later on, you'll be paying back more principal with each payment since there will be less principal left to pay interest on. Mortgage payments are typically designed so that you pay the same amount each month over the lifetime of the loan.
Adjustable Rate Mortgages
The situation is slightly more complicated for adjustable rate mortgages, where the interest rate can fluctuate over time. There, your rate and payments may go up and down with prevailing interest rates, but the same general principals apply.
Keep in mind that you may also pay other required payments through your mortgage lender, including payments for homeowner's insurance or for property taxes. These payments will naturally increase your mortgage payment but won't go to reduce your debt.
Calculating What's Left to Pay
To find your outstanding mortgage balance, the easiest way is usually to use an online amortization or mortgage payoff calculator, such as this one from Credit Karma. Amortization refers to paying off the cost of something, such as your house, over time.
Put your initial principal, your interest rate and the length of your mortgage, such as 30 years, into the calculator. Most will generate a table or graph showing where your mortgage balance will stand, and how much you'll be paying in interest versus principal, at a given time.
If you would prefer not to put this information into an online system, you can download spreadsheet files for programs like Microsoft Excel that will allow you to do the computations on your computer.
Using the Mortgage Balance Formula
If you don't want to use a premade mortgage payoff calculator tool for whatever reason, you can compute the amount left to pay yourself using a standard formula.
This formula can be written as B = I(1+r)n - P * [(1+r)n-1) / r]
Where B is the current balance, I is the initial balance or principal, r is the interest rate, n is the number of payments you have made so far and P is the payment. You can plug in numbers and solve this formula using any scientific or graphing calculator, calculator software or a spreadsheet program.
This formula works for other types of loans as well, including auto loans and any credit card where you pay the same amount each month and do not borrow any more money.
Prepaying Your Mortgage
If you are checking your mortgage balance with a thought toward paying it all off, remember that some mortgages and other loans have a prepayment penalty. If you pay back the balance early, you'll still have to pay a little or a lot extra to make up for the lost interest to the lender.
- Investopedia: Understanding the Mortgage Payment Structure
- Credit Karma: Amortization Calculator
- Bankrate: Amortization Schedule Calculator
- Mortgage Calculator: Mortgage Balance Calculator
- Vertex42: Mortgage Calculators for Excel
- Finance Formulas: Remaining Balance Formula
- Fundera: Prepayment Penalty: What Happens If You Pay Off Your Loan Early?
Steven Melendez is an independent journalist with a background in technology and business. He has written for a variety of business publications including Fast Company, the Wall Street Journal, Innovation Leader and Ad Age. He was awarded the Knight Foundation scholarship to Northwestern University's Medill School of Journalism.