1. What is the Fannie Mae Extra Mortgage Payment Calculator?

Definition: This calculator determines how making extra payments reduces the total number of payments needed to pay off a Fannie Mae mortgage.

Purpose: It helps homeowners understand the impact of additional payments on their mortgage term and total interest paid.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( n' \) — Reduced number of payments
• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Regular monthly payment (USD)
• \( E \) — Extra monthly payment (USD)

Explanation: The formula calculates how much faster you'll pay off your mortgage by making additional payments each month.

3. Importance of Extra Mortgage Payments

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

4. Using the Calculator

Tips: Enter your principal loan amount, monthly interest rate (as decimal), regular monthly payment, and any extra amount you plan to pay. All values must be > 0 (except extra payment which can be 0).

5. Frequently Asked Questions (FAQ)

Q1: How do I convert APR to monthly rate?
A: Divide your annual rate by 12 (e.g., 6% APR = 0.06/12 = 0.005 monthly rate).

Q2: Does Fannie Mae charge for extra payments?
A: Fannie Mae typically doesn't charge prepayment penalties, but check your specific loan terms.

Q3: Should I apply extra to principal or regular payment?
A: Specify "principal only" payments for maximum impact on reducing your loan term.

Q4: How much can extra payments save me?
A: Even $100 extra per month can shorten a 30-year mortgage by several years and save thousands in interest.

Q5: Is this calculator specific to Fannie Mae loans?
A: While designed with Fannie Mae in mind, it works for most conventional fixed-rate mortgages.