Mortgage Payoff Calculator Additional Payment

Reduced Payments Formula:

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

Principal (P):

USD

Interest Rate (r):

decimal

Monthly Payment (M):

USD

Additional Payment (E):

USD

Reduced Payments (n'):

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1. What is a Mortgage Payoff Calculator with Additional Payment?

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

Purpose: It helps homeowners understand the impact of extra payments on their mortgage term.

2. How Does the Calculator Work?

The calculator uses the formula:

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

Where:

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

Explanation: The formula calculates how many payments would be needed to pay off the loan when making extra payments each month.

3. Importance of Additional Payments

Details: Making additional payments can significantly reduce the total interest paid and shorten the loan term.

4. Using the Calculator

Tips: Enter the principal amount, interest rate (as decimal), regular payment, and any additional 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 (for months) and by 100 to convert to decimal (e.g., 6% APR = 0.06/12 = 0.005).

Q2: What if I get an error message?
A: This means your payment + additional payment must be greater than principal × rate. Increase your payments.

Q3: How is this different from regular payoff calculators?
A: This specifically shows the impact of additional payments on your payoff timeline.

Q4: Can I use this for other loans?
A: Yes, it works for any amortizing loan (car loans, personal loans, etc.).

Q5: How accurate is this calculation?
A: It's mathematically precise for fixed-rate loans with consistent additional payments.