1. What is the Bankrate Early Payoff Calculator?

Definition: This calculator determines how much faster you can pay off your mortgage by making extra payments.

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

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: The formula calculates how many payments would be needed to pay off the loan when making additional payments each month.

3. Importance of Early Payoff Calculation

Details: Making extra payments can save thousands in interest and shorten your loan term significantly.

4. Using the Calculator

Tips: Enter your loan principal, interest rate (as decimal), regular payment, and any extra payment you plan to make. All values must 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).

Q2: Should I make extra payments or refinance?
A: This depends on your rate difference; use this calculator to compare options.

Q3: How accurate is this calculation?
A: It assumes fixed payments and rate; actual results may vary slightly.

Q4: What's the best way to apply extra payments?
A: Specify "apply to principal" with your lender for maximum impact.

Q5: How much can I save with extra payments?
A: Even $100/month extra can often shorten a 30-year loan by several years.