1. What is a Mortgage Early Payoff Calculator?

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

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
• \( P \) — Loan principal ($)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Regular monthly payment ($)
• \( E \) — Extra monthly payment ($)

Explanation: The formula calculates how the extra payments reduce the total number of payments needed to fully amortize the loan.

3. Benefits of Early Mortgage Payoff

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

4. Using the Calculator

Tips: Enter your loan amount, interest rate, current monthly payment, and any additional amount you can pay each month.

5. Frequently Asked Questions (FAQ)

Q1: How much can extra payments shorten my mortgage?
A: Even small additional amounts can reduce your term by years. For example, $100 extra on a $200,000 loan at 4% can save ~5 years.

Q2: Should I pay extra principal or refinance?
A: Compare savings from extra payments versus refinancing costs. Often, extra payments provide better returns without refinancing fees.

Q3: Is it better to make biweekly payments?
A: Biweekly payments (half the monthly amount every 2 weeks) result in one extra monthly payment per year, effectively reducing your term.

Q4: How do extra payments affect amortization?
A: Extra payments go entirely toward principal, reducing future interest calculations and accelerating payoff.

Q5: Are there prepayment penalties?
A: Most modern mortgages don't have prepayment penalties, but check your loan terms to be sure.