25 Year Home Loan Payoff Calculator (2024)

This calculator defaults to a 25-year loan and figures monthly mortgage payments based on the principal amount borrowed, the length of the loan and the annual interest rate. This calculator will also figure your total monthly mortgage payment which will include your property tax, property insurance and PMI payments. Then, once you have computed the monthly payment, click on the "Create Amortization Schedule" button to create a report you can print out.

For your convenience current Redwood City mortgage rates are published below.

Current Redwood City Mortgage Rates

We publish current Redwood City mortgage rates. CA homebuyers and refinancers can use the filters at the top of the table to see the monthly payments and rates availble for their loans.

Things to Consider Before Choosing a 25-Year Fixed-Rate Mortgage

Shopping around for a new home can get daunting. Aside from qualifying for a loan, you must make sure you have enough funds to cover the costs. On top of this, you must find a favorable deal that will help you save on a long-term loan.

Out of many types of mortgages, the most common is the 30-year fixed-rate loan. Then, there are shorter terms like a 15-year fixed-rate term and a 10-year fixed mortgage. However, did you know it’s possible to obtain a 25-year fixed-rate loan?

Before you choose this option, here are a couple of factors to consider. Read on to learn more about 25-year fixed-rate loans, what they’re commonly used for, and their pros and cons.

How Popular are 25-Year Fixed-Rate Loans?

The 25-year fixed-rate mortgage is one of the least popular types of residential loan financing in the U.S. In a study published by the Urban Institute, 30-year fixed-rate loans remain the most purchased mortgage product, with 77 percent of new originations in April 2020. This is based on their June 2020 Housing Finance at a Glance: A Monthly Chartbook.

On the other hand, 15-year fixed rate loans account for 14.2 percentof new mortgages in April 2020. Meanwhile, ARMs accounted for 2.7 percent of new loan originations in April 2020. Finally, the study mentions an “Other” category which represent around 6.1 percent of the market. This includes other types of loans, such as 25-year fixed mortgages, as well as 20-year and 10-year loans.

Very few buyers in America obtain 25-year fixed mortgages. More borrowers tend to get 30-year fixed-rate loans because it’s easier to qualify for a longer term offering lower monthly payments. A 25-year fixed-rate loan is more common in other countries such as the United Kingdom and Canada. In other countries, the 25-year term is also structured as a variable rate loan.

For example, for a 5/1 ARM, you’ll pay a fixed rate for the first 5 years. After this period, your rate is scheduled to reset annually for the entire life of the loan. If you agree to 25-year payment term, you’ll pay a fixed rate for the first 5 years, after which your rate resets annually for 20 years. If the rate increases, your monthly payments will get higher. Meanwhile, if the rate drops, your payments will also be minimized.

Types of Mortgage That Offer 25-Year Fixed-Rate Loans

While not all lenders offer 20-year fixed mortgages, you may find them in the following types of conventional loans and government-insured mortgages:

Conforming Conventional Loans

Conventional loans are type of home financing that’s offered by private lenders like mortgage companies, banks, and credit unions. They are not federally sponsored by the government. Only borrowers with a minimum credit score of 650 are eligible for a conventional loan. This option is well suited for high income buyers with good credit scores and a reliable source of funds.

A conventional loan is classified as a conforming loan when it is below federal financing limits. For example, if the conforming limit is set at $647,200 for a single-unit home, and your loan is $350,000, your mortgage is a conventional loan. However, if your loan exceeds the limit, it’s referred to as a non-conforming loan or a jumbo mortgage. Most parts of the country use the default baseline loan limit, while high-cost areas have a limit of up to 150% of the baseline loan limit.

Government-backed Housing Loans

Government-sponsored loans, as the name suggests, are federally-backed mortgages. These loans enable low to moderate-income borrowers purchase property that they otherwise cannot afford. It’s especially attractive to first-time homebuyers who are still building their savings. For example, you can qualify for an FHA loan even if you have a credit score of 500, as long as you make a 10 percent downpayment.

Buyers can choose from the following government-backed housing loans:

• The Federal Housing Administration backs FHA loans
• The U.S. Department of Agriculture backs USDA loans
• The U.S. Department of Veterans Affairs backs VA loans
• Conventional loans are not directly backed by the Federal government. Instead they are typically backed by Fannie Mae & Freddie Mac, which are government sponsored entities (GSEs).

Why Some Buyers Choose a 25-Year Fixed Mortgage

A shorter loan is still more beneficial compared to a 30-year fixed term. This option removes 5 years worth of interest payments compared to a 30-year loan. It also allows you to obtain more affordable payments compared to a 15-year fixed mortgage.

For the few who choose this option, it helps reduce interest charges. Five years off a 30-year term translates to considerable savings. A slightly lower interest rate can help you save too. And if you cannot afford to refinance, you’d still pay off your loan 5 years earlier than a 30-year fixed mortgage.

How does a 25-year fixed mortgage work? The table below compares a 25-year fixed-rate loan alongside a 30-year and a 15-year fixed loan. Let’s suppose you made a 20 percent downpayment and borrowed $340,000.

Loan Amount: $340,000

In the example above, notice how payments are larger as the loan term shortens. Meanwhile, interest rates decrease with a shorter term. The 30-year fixed mortgage has a monthly payment of $1,584.25, which is the cheapest among the three terms. However, it also generates the most interest cost at $230,331.80.

With a 25-year fixed loan term, you spend $1,736.96 a month, which adds $152.71 to your monthly payments. This is considerably more affordable compared to a 15-year fixed term, with a monthly payment of $2,413.94. That’s $829.69 more costly than a 30-year fixed mortgage payment.

When it comes to interest costs, you save $49,243.15 with a 25-year fixed mortgage. That’s a huge amount that can go towards savings, emergencies, and other important expenses. Likewise, you’ll save more interest costs with a 15-year fixed term, with total interest savings of $135,822.90.

This example shows you’ll still make significant savings with a 25-year fixed term. However, only if you can afford it, it’s better to pay off your mortgage with a much shorter term.

The Benefits and Drawbacks of a 25-Year-Fixed Loan

Taking a 25-year fixed mortgage will help you save a substantial amount on interest charges. It helps remove 5 years on a 30-year term. However, it may be difficult to find a lender that offers 25-year fixed terms.

Generally, if you can afford it, it’s better to take a shorter term instead. Furthermore, you can make extra payments to reduce a 30-year term. Additional payments decrease your outstanding balance and help shorten your term.

The table below details the benefits and disadvantages of a 25-year fixed mortgage:

Again, if you cannot obtain a 25-year fixed loan, you can make additional payments to reduce your term. Making extra payments help reduce your outstanding balance, most especially during the beginning of your loan.

The table example below shows how much you can add to your monthly payments to trim years off a 30-year fixed rate loan.

• 30-Year Fixed Mortgage
• Loan Amount: $340,000
• APR: 3.8%

Based on the table, a $1,584.25 monthly payment is needed to pay off a 30-year mortgage. But if you make an extra payment of $95.47 each month, you can reduce your loan term to 27 years. You’ll pay off your loan 3 years earlier while saving $26,099.71 in interest charges. Meanwhile, to pay off your loan in 25 years, you must make an additional payment of $173.06 each month. This will save you $43,134.64 in overall interest costs.

Loan Amortization

Fixed-rate loans follow a traditional amortization schedule. This is a table which breaks down your monthly mortgage payments, showing how much is applied to your principal and interest. Your amortization schedule shows how many payments you must make to pay off your loan.

• Principal – Also referred to as the outstanding balance, this is the amount you owe your lender. The larger your principal, the higher interest charges accrue.
• Interest – This is the payment your lender charges to provide your loan. Higher interest charges accrue the longer it takes to pay off your loan.

In the first years of your loan, a larger portion of your monthly payment is applied to interest rather than the principal . But halfway through your mortgage, interest payments decrease and majority of your payments are applied to the principal. As long as you don’t miss payments, you should pay down your mortgage within 25 years.

To generate an amortization schedule for a 25-year fixed-rate loan, use our calculator above.

The following table shows the amortization on a 25-year $300,000 home loan at 3.1% APR for a loan that begins next year. On this example loan, payments being on January 31, 2025 for a loan originated on December 31, 2024.

You can generate a similar printable table using the above calculator by clicking on the [Inline Schedule] button. If you would like to print out your amortization schedule please click on the [Printable Schedule] button.

To Sum It All Up

A 25-year fixed mortgage cuts 5 years of interest charges compared to a 30-year term. Though it requires a slightly higher payment, it is not as expensive as a 15-year fixed loan . Twenty-five year fixed mortgages also have a slightly lower interest rate compared to a 30-year loan.

However, this is not a very popular type of loan in the U.S. You might have a hard time looking for a lender that offers 25-year terms. Most buyers prefer taking a shorter loan or refinancing. Furthermore, homeowners have the option to make extra payments to shave off a couple of years from their 30-year loan.

Though 25-year loans are not common, it’s still worth obtaining a shorter term. You’ll save thousands of dollars worth of interest charges while paying your mortgage 5 years earlier.