1. What is a Mortgage Loan Payoff Calculator with Extra Payment?

Definition: This calculator determines how many payments you'll save by making additional principal payments on your mortgage.

Purpose: It helps homeowners understand the impact of extra payments on their loan term and total interest paid.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: The formula calculates how the extra payment reduces the loan term by accelerating principal reduction.

3. Importance of Extra Payment Calculation

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

4. Using the Calculator

Tips: Enter your loan principal, monthly interest rate (annual rate ÷ 12), regular payment, and any extra payment you plan to make. All values must be > 0 (except extra payment which can be 0).

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual rate to monthly?
A: Divide your annual percentage rate by 12 (months) and by 100 (to convert to decimal). For example, 6% APR = 0.06/12 = 0.005 monthly.

Q2: What's a typical monthly payment?
A: Use our Mortgage Payment Calculator to determine your regular payment amount based on principal, rate, and term.

Q3: How much can extra payments save me?
A: Even $100 extra per month on a $200,000 loan at 4% can save ~4 years and $20,000 in interest.

Q4: Should I pay extra principal or invest?
A: Compare your mortgage rate to potential investment returns. Paying extra is a guaranteed return equal to your interest rate.

Q5: Does this work for all loan types?
A: This applies to standard amortizing loans. ARM loans may have different calculations.