1. What is a Mortgage Calculator With Extra Payments?

Definition: This calculator shows how making extra payments toward your mortgage principal can reduce both the loan term and total interest paid.

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

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( B_k \) — Balance after month k ($)
• \( B_{k-1} \) — Previous balance ($)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Regular monthly payment ($)
• \( E \) — Extra payment toward principal ($)

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. Importance of Extra Payments

Details: Even small extra payments can significantly reduce total interest and shorten the loan term, potentially saving thousands of dollars.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on your loan details, but even $100 extra per month can save thousands and cut years off your mortgage.

Q2: When is the best time to make extra payments?
A: The earlier you start, the more you'll save, but extra payments are beneficial at any time.

Q3: Should I refinance or make extra payments?
A: Compare both options - sometimes a combination works best. This calculator helps evaluate extra payments.

Q4: Are there prepayment penalties?
A: Most modern mortgages don't have them, but check your loan terms.

Q5: How do extra payments affect amortization?
A: They accelerate principal reduction, causing more of each subsequent regular payment to go toward principal.