1. What is a Mortgage Refinance Early Payoff Calculator?

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

Purpose: It helps homeowners understand the impact of additional payments on their mortgage term and interest savings.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( n' \) — Reduced number of payments (unitless)
• \( P \) — Principal 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 needed to pay off the loan when making additional payments each month.

3. Importance of Early Payoff Calculation

Details: Understanding early payoff potential helps homeowners save thousands in interest and become debt-free sooner.

4. Using the Calculator

Tips: Enter your loan principal, interest rate (as decimal), regular payment, and any extra payment you plan to make. 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 (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's mathematically precise for fixed-rate loans, but doesn't account for fees or payment timing.

Q4: What if I can't make extra payments every month?
A: This shows the maximum benefit. Irregular payments will have less impact.

Q5: How does this relate to refinancing?
A: Use this to compare keeping your current loan with extra payments versus refinancing options.