1. What is a Mortgage Payoff Calculator?

Definition: This calculator determines how long it will take to pay off a mortgage based on your monthly payment, principal amount, and interest rate.

Purpose: It helps homeowners understand when their mortgage will be fully paid off and how payment amounts affect the payoff timeline.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( n \) — Number of payments (months)
• \( M \) — Monthly payment amount (USD)
• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (decimal)

Explanation: The formula calculates how many payments are needed to reduce the principal to zero, accounting for interest accumulation.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning, assessing refinancing options, and evaluating the impact of extra payments.

4. Using the Calculator

Tips: Enter your regular monthly payment, the current principal balance, and the monthly interest rate (annual rate ÷ 12). Default monthly rate is 0.005 (6% APR).

5. Frequently Asked Questions (FAQ)

Q1: How do I find my monthly interest rate?
A: Divide your annual percentage rate (APR) by 12. For example, 6% APR = 0.06/12 = 0.005 monthly rate.

Q2: What if I make extra payments?
A: This calculator shows the timeline for regular payments only. Extra payments will shorten your payoff time.

Q3: Why does the formula use logarithms?
A: Logarithms help solve for time in compound interest calculations, which is how mortgage interest accrues.

Q4: What's not included in this calculation?
A: This doesn't account for property taxes, insurance, or PMI that might be included in your total payment.

Q5: How accurate is this calculator?
A: It provides a close estimate but actual payoff may vary slightly due to rounding in real amortization schedules.