The Mortgage Proceeds Calculator is a powerful tool designed to help homeowners and potential sellers understand the estimated net amount of cash they would receive if they were to sell their property and pay off their existing mortgage. This calculation is crucial for financial planning, determining affordability for a new home, or simply understanding your home equity.
How the Calculator Works: The Math Behind Proceeds
The calculator primarily focuses on determining the net proceeds from a sale. This is calculated by taking the estimated sale price and subtracting all outstanding costs associated with the sale and the mortgage.
The core of the calculation involves determining the payoff amount of your mortgage. This is more than just the remaining balance; it includes any interest accrued up to the sale date and potentially any early payoff penalties.
Key Inputs Explained:
Original Loan Amount: The initial amount borrowed for the mortgage.
Annual Interest Rate: The yearly interest rate on your mortgage loan.
Loan Term (Years): The total duration of the loan, typically 15, 30, or 40 years.
Number of Payments Made: The total number of monthly payments you have already made towards your loan. This is essential for calculating the amortization schedule and the precise remaining balance.
Current Remaining Balance (Optional): If you know the exact current payoff amount (which might include fees not captured by simple amortization), you can enter it directly for a more precise calculation. If left blank, the calculator will estimate the balance based on the other inputs.
Estimated Sale Price: The projected price at which you anticipate selling your home. This is a critical variable and can significantly impact the net proceeds.
Estimated Selling Costs: These are the costs associated with selling your home, including realtor commissions (typically 5-6% of the sale price), closing costs (legal fees, title insurance, transfer taxes, escrow fees, etc., often 1-3% of the sale price), and potential repairs or staging costs.
The Calculation Steps:
Calculate Monthly Payment: Using the original loan amount, annual interest rate, and loan term, the calculator first determines the fixed monthly mortgage payment (Principal & Interest – P&I). The standard formula for this is:
$M = P \left[ \frac{i(1+i)^n}{(1+i)^n – 1} \right]$
Where:
$M$ = Monthly Payment
$P$ = Original Loan Amount
$i$ = Monthly Interest Rate (Annual Rate / 12)
$n$ = Total Number of Payments (Loan Term in Years * 12)
Calculate Remaining Balance: Based on the monthly payment and the number of payments made, the calculator determines the outstanding principal balance. The formula for the remaining balance after k payments is:
$B = P \frac{(1+i)^n – (1+i)^k}{(1+i)^n – 1} – M \frac{(1+i)^n – (1+i)^k}{(1+i)^n – 1}$
Or more commonly, using the future value of payments made:
$B = M \frac{1 – (1+i)^{-(n-k)}}{i}$
Where:
$B$ = Remaining Balance
$k$ = Number of Payments Made
$n-k$ = Number of Payments Remaining
Calculate Mortgage Payoff Amount: This includes the remaining principal balance, plus any accrued interest from the last payment to the sale date, and any potential prepayment penalties. For simplicity in this calculator, we'll estimate this by adding a prorated amount of interest.
Calculate Estimated Selling Costs: These are usually a percentage of the Estimated Sale Price.
$Selling\ Costs = Estimated\ Sale\ Price \times (Realtor\ Commission\ \% + Other\ Closing\ Costs\ \%)$
Before Listing Your Home: To set realistic price expectations and understand your financial position.
When Considering a Move: To gauge how much equity you'll have available for a down payment on a new property.
Financial Planning: To get a clear picture of your net worth and home equity.
Refinancing Decisions: While not a direct refinancing tool, understanding equity can inform decisions about cash-out refinancing.
Disclaimer: This calculator provides an estimate based on the inputs provided. It does not account for all potential closing costs, specific lender fees, prorations for property taxes or homeowner's insurance, or unique local market conditions. It is strongly recommended to consult with a real estate agent, mortgage lender, or financial advisor for precise figures.
function calculateMortgageProceeds() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var paymentsMade = parseInt(document.getElementById("paymentsMade").value);
var remainingBalanceInput = document.getElementById("remainingBalance").value;
var estimatedSalePrice = parseFloat(document.getElementById("estimatedSalePrice").value);
var sellingCostsRate = parseFloat(document.getElementById("sellingCostsRate").value);
var resultDiv = document.getElementById("result");
resultDiv.style.display = 'none'; // Hide previous result
if (isNaN(loanAmount) || isNaN(interestRate) || isNaN(loanTerm) || isNaN(paymentsMade) || isNaN(estimatedSalePrice) || isNaN(sellingCostsRate)) {
resultDiv.textContent = "Please fill in all required fields with valid numbers.";
resultDiv.style.color = "red";
resultDiv.style.backgroundColor = "#ffebee";
resultDiv.style.borderColor = "red";
resultDiv.style.display = 'block';
return;
}
if (interestRate < 0 || loanTerm <= 0 || paymentsMade < 0 || estimatedSalePrice <= 0 || sellingCostsRate = 0) {
calculatedRemainingBalance = parseFloat(remainingBalanceInput);
} else {
if (monthlyInterestRate === 0) { // Handle 0 interest rate case
calculatedRemainingBalance = loanAmount – (loanAmount / totalPayments) * paymentsMade;
} else {
var monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, totalPayments)) / (Math.pow(1 + monthlyInterestRate, totalPayments) – 1);
calculatedRemainingBalance = (monthlyPayment / monthlyInterestRate) – ((monthlyPayment / monthlyInterestRate) * Math.pow(1 + monthlyInterestRate, paymentsMade));
// Ensure balance doesn't go negative due to amortization calculation overpayment
if (calculatedRemainingBalance < 0) calculatedRemainingBalance = 0;
}
}
// Add a small buffer for interest accrual to the payoff date
var estimatedPayoffAmount = calculatedRemainingBalance * (1 + monthlyInterestRate); // Simple approximation
if (isNaN(estimatedPayoffAmount) || estimatedPayoffAmount < 0) estimatedPayoffAmount = calculatedRemainingBalance; // Fallback
var estimatedSellingCosts = estimatedSalePrice * (sellingCostsRate / 100);
var netProceeds = estimatedSalePrice – estimatedPayoffAmount – estimatedSellingCosts;
// Ensure proceeds are not negative (meaning costs exceed sale price)
if (netProceeds < 0) netProceeds = 0;
resultDiv.innerHTML = "Estimated Net Proceeds: $" + netProceeds.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",") + "";
resultDiv.style.color = "#28a745";
resultDiv.style.backgroundColor = "#e9f7ec";
resultDiv.style.borderColor = "#28a745";
resultDiv.style.display = 'block';
}