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

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

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

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( n' \) — Reduced payment period (months)
• \( P \) — 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 would be required when applying extra money toward the principal each month.

3. Importance of Extra Mortgage Payments

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, annual interest rate (converted to decimal), regular monthly payment, and any extra amount you plan to pay. All values must be > 0 (except extra payment 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 (for monthly payments). Example: 6% APR = 0.06/12 = 0.005 monthly rate.

Q2: Should I apply extra to principal or regular payment?
A: Always specify extra payments should go toward principal to maximize interest savings.

Q3: How much can I save with extra payments?
A: Even $100 extra per month on a $300,000 loan at 4% can save ~$28,000 and cut 5 years off a 30-year mortgage.

Q4: Is it better to make extra payments or refinance?
A: Depends on rates and fees - use this calculator to compare scenarios.

Q5: Can I convert n' to years?
A: Yes, divide the result by 12 to get years (e.g., 180 months = 15 years).