Mortgage Loan Payoff Calculator Bankrate

Loan Payoff Formula:

\[ n' = \frac{-\log(1 - (P \times r) / (M + E))}{\log(1 + r)} \]

Principal (P):

USD

Interest Rate (r):

decimal

Monthly Payment (M):

USD

Extra Payment (E):

USD

Reduced Payments (n'):

Unit Converter ▲

Unit Converter ▼

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1. What is a Mortgage Loan Payoff Calculator?

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

Purpose: It helps homeowners understand the impact of additional payments on their loan term.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ n' = \frac{-\log(1 - (P \times r) / (M + E))}{\log(1 + r)} \]

Where:

\( n' \) — Reduced number of payments (unitless)
\( P \) — Principal loan amount (USD)
\( r \) — Monthly interest rate (decimal)
\( M \) — Regular monthly payment (USD)
\( E \) — Extra monthly payment (USD)

Explanation: The formula calculates how many payments would be needed when applying extra payments each month.

3. Importance of Loan Payoff Calculation

Details: Understanding payoff timelines helps with financial planning and can save thousands in interest payments.

4. Using the Calculator

Tips: Enter your loan principal, interest rate (as decimal), regular payment, and any extra payment you plan to make.

5. Frequently Asked Questions (FAQ)

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

Q2: Does this account for changing interest rates?
A: No, this assumes a fixed interest rate for the loan term.

Q3: What if I can't make extra payments every month?
A: The calculation assumes consistent extra payments. For irregular payments, results will vary.

Q4: How accurate is this calculator?
A: It provides a mathematical estimate; actual terms may vary based on lender policies.

Q5: Can I use this for other types of loans?
A: Yes, it works for any amortized loan (car loans, personal loans, etc.).