How to Calculate Paying Down Your Home Equity Debt

by A. Low

Home equity loans, unlike credit card debt and other loans, are ticking clocks. Once you obtain your loan, you have a set amount of time to pay back the debt plus -- otherwise, you may lose your home. That is why it is essential to understand your payment plan and make adjustments, if necessary, to pay it down on time.

1. Use a home equity payoff calculator, which can be found online, and enter 1 for the number of debts to include in your payoff plan. You may enter a higher number if you would like to include other debts in your plan, such as credit cards, auto loans, student loans, or mortgages.

2. Give your home equity loan a name, then select "home equity loan" from the list. Enter your current loan balance.

3. Select the type of interest rate on your loan, either fixed or adjustable. Enter your current interest and your minimum monthly payment.

4. Determine how much extra money you can put toward your home equity loan, and enter it in the box. Be realistic -- while some people may be able to save hundreds each month by cutting down on spending, others may find this to be too much of a financial strain.

5. Enter the number of raises you can expect to receive within the next six years. On the following page, enter the additional amount of money you'll be able to add to your monthly payment due to your raise, and when the raise will go into effect.

6. Estimate the number of windfalls, such as inheritances, lottery winnings, and other sudden sources of money, you may receive over the next six years. Although windfalls are difficult to predict, try to enter the amounts you are certain of so that your payoff plan is as accurate as possible.

7. Choose your tax bracket from a list. The list shows how much you have to earn as a single person or a married couple to fall into a particular tax bracket.

8. Review your payoff plan by clicking "get plan." The plan will show you how many months it will take to pay off your home equity loan based on a specific amount each month. Print off your plan and keep it handy for when it's time to make your monthly home equity payments.

Items you will need

  • Computer

Photo Credits

  • BananaStock/BananaStock/Getty Images