1. What is a Mortgage Payoff Calculator with Extra Payments?

Definition: This calculator determines how much you can reduce your mortgage term by making extra payments.

Purpose: It helps homeowners understand the impact of additional payments on their mortgage payoff timeline.

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 many payments you'll need to make when adding extra payments each month.

3. Importance of Extra Payment Calculation

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

4. Using the Calculator

Tips: Enter your principal amount, interest rate (as decimal), regular payment, and extra payment amount. All values must be ≥ 0.

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: Should I make extra payments or invest?
A: Compare your mortgage rate with potential investment returns to decide.

Q3: How much can I save with extra payments?
A: Even small extra payments can save thousands in interest and cut years off your loan.

Q4: Does this work for all loan types?
A: This works best for fixed-rate mortgages. Adjustable-rate mortgages may need different calculations.

Q5: Can I make lump sum payments instead?
A: Yes, lump sums reduce principal which also shortens the loan term.