Mortgage Payoff Calculator Extra Principal

Mortgage Payoff 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

Extra Principal (E):

USD

Reduced Payments (n'):

Unit Converter ▲

Unit Converter ▼

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

Definition: This calculator determines how making extra principal payments affects your mortgage payoff timeline.

Purpose: It helps homeowners understand how additional payments can reduce the total interest paid and shorten the loan 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)
\( E \) — Extra principal payment (USD)

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

3. Importance of Extra Principal Payments

Details: Making extra payments can significantly reduce total interest costs and shorten your mortgage term by years.

4. Using the Calculator

Tips: Enter your principal amount, interest rate (as decimal), regular payment, and any extra principal you plan to pay. All values must be > 0 (except extra principal which can 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: Does this account for changing interest rates?
A: No, this assumes a fixed-rate mortgage with constant payments.

Q3: How accurate is this calculation?
A: It provides a close estimate but actual results may vary slightly due to rounding in real amortization schedules.

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

Q5: How much can I save with extra payments?
A: Even small extra payments can save thousands in interest and reduce your term by months or years.