1. What is a Mortgage Loan With Extra Payment Calculator?

Definition: This calculator shows how making extra payments affects your mortgage balance, interest paid, and loan term.

Purpose: It helps homeowners understand the financial benefits of making 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 ($)

Explanation: Each month, interest is calculated on the remaining balance, then the payment (regular + extra) is applied to reduce the principal.

3. Importance of Extra Payment Calculation

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

4. Using the Calculator

Tips: Enter your loan amount, interest rate, loan term, and any planned extra monthly payment. All financial values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments save money?
A: Extra payments reduce principal faster, which reduces the amount of interest charged over the life of the loan.

Q2: Is it better to make extra payments or refinance?
A: It depends on your interest rate and loan terms. This calculator helps compare options.

Q3: How much can I save with extra payments?
A: Even $100 extra per month on a $200,000 loan can save tens of thousands in interest and years off your mortgage.

Q4: Should I pay extra every month or lump sums?
A: Regular extra payments have the greatest impact, but any extra payment helps. This calculator assumes regular extra payments.

Q5: Will my payment amount change if I make extra payments?
A: No, your regular payment stays the same, but more goes toward principal, paying off the loan faster.