1. What is a Mortgage Calculator With Extra Principal?

Definition: This calculator shows how making extra principal 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:

• \( B_k \) — Current balance (USD)
• \( B_{k-1} \) — Previous balance (USD)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Regular monthly payment (USD)
• \( E \) — Extra principal payment (USD)

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

3. Importance of Extra Principal Payments

Details: Even small extra payments can significantly reduce total interest and shorten your loan term. For example, $100 extra per month on a $300,000 loan at 4% can save ~$28,000 and pay off the loan 4 years early.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, term, and any planned extra monthly payment. The calculator shows your savings compared to making only standard payments.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect amortization?
A: Extra payments reduce principal faster, which reduces future interest calculations and accelerates payoff.

Q2: Is it better to make extra payments or refinance?
A: Depends on rates and fees. Extra payments provide guaranteed returns equal to your loan's interest rate.

Q3: When is the best time to make extra payments?
A: Earlier is better - more of your payment goes toward interest later in the loan.

Q4: Can I specify irregular extra payments?
A: This calculator assumes consistent extra payments. For irregular payments, use an amortization spreadsheet.

Q5: Are there prepayment penalties?
A: Most modern loans don't have them, but check your loan terms.