1. What is a Mortgage Calculator with Extra Payments?

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

Purpose: It helps homeowners understand the financial benefits of paying more than the minimum mortgage payment.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: Each month's balance is calculated by applying interest to the previous balance, then subtracting both the regular payment and any extra payment.

3. Benefits of Extra Mortgage Payments

Details: Extra payments reduce principal faster, saving thousands in interest and potentially cutting years off your loan term.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, loan term, and the extra amount you can pay each month. The calculator shows your savings.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Even small extra payments can save thousands. For example, $100 extra on a $300,000 loan at 4% can save ~$30,000 and 5 years.

Q2: Should I pay extra principal or refinance?
A: Compare both options. Extra payments work well when rates are similar to your current rate.

Q3: When is the best time to make extra payments?
A: Early in the loan term saves the most interest since more of your payment goes to interest initially.

Q4: Are there prepayment penalties?
A: Most modern loans don't have them, but check your loan documents to be sure.

Q5: How do I actually make extra payments?
A: Specify with your lender that extra amounts should go to principal, not future payments.