1. What is a Mortgage Payoff Calculator?

Definition: This calculator determines how many payments are needed to fully pay off a mortgage based on the monthly payment amount, principal, and interest rate.

Purpose: It helps homeowners and borrowers understand the timeline for paying off their mortgage under current terms.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: The formula calculates how many periods are needed to amortize the loan given fixed payments and interest rate.

3. Importance of Mortgage Payoff Calculation

Details: Understanding payoff time helps with financial planning, comparing loan options, and evaluating the impact of extra payments.

4. Using the Calculator

Tips: Enter your monthly payment amount, principal balance, and monthly interest rate (annual rate ÷ 12). All values must be > 0.

5. Frequently Asked Questions (FAQ)

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

Q2: Does this include taxes and insurance?
A: No, this calculates based on principal and interest only (P&I). Your actual payment may include escrow items.

Q3: What if I make extra payments?
A: This calculator assumes fixed payments. Extra payments would reduce the payoff time.

Q4: Why is my result not a whole number?
A: The calculation may show partial payments. Round up to the next whole payment for actual payoff.

Q5: How accurate is this calculation?
A: It's mathematically precise for fixed-rate loans with constant payments. Adjustable-rate mortgages require more complex calculations.