1. What is an Extra Principal Payment Mortgage Calculator?

Definition: This calculator shows how making extra principal payments affects your mortgage payoff time and total interest paid.

Purpose: It helps homeowners understand the benefits of paying extra toward their mortgage principal each month.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( B_k \) — Balance in month k (USD)
• \( B_{k-1} \) — Previous balance (USD)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Regular monthly payment (USD)
• \( E \) — Extra principal payment (USD)

Explanation: Each month's balance grows by interest, then decreases by both the regular payment and any extra payment.

3. Importance of Extra Principal Payments

Details: Making extra payments can significantly reduce your loan term and total interest paid, often saving thousands of dollars.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, loan term, and how much extra you can pay each month. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments save money?
A: Extra payments reduce principal faster, so less interest accrues over time.

Q2: Is it better to pay extra monthly or lump sums?
A: Monthly extra payments have a greater impact due to compounding, but any extra helps.

Q3: Will my payment amount change if I pay extra?
A: No, your regular payment stays the same, but more goes toward principal.

Q4: Are there prepayment penalties?
A: Most modern mortgages don't have them, but check your loan terms.

Q5: How much should I pay extra?
A: Even $50-100/month can make a significant difference over time.