Mortgage Refinance Payoff Calculator Bankrate

Payoff Time Formula:

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

Number of Payments (n):

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1. What is a Mortgage Refinance Payoff Calculator?

Definition: This calculator determines how many payments are needed to pay off a mortgage based on the monthly payment amount, principal, and interest rate.

Purpose: It helps homeowners understand when their refinanced mortgage will be fully paid off under current terms.

2. How Does the Calculator Work?

The calculator uses the formula:

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

Where:

\( n \) — Number of payments (unitless)
\( M \) — Monthly payment (USD)
\( P \) — Principal amount (USD)
\( r \) — Monthly interest rate (decimal)

Explanation: The formula calculates the time needed to amortize the loan by comparing the payment to the interest and principal components.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning, comparing refinance options, and determining if extra payments would be beneficial.

4. Using the Calculator

Tips: Enter your monthly payment, remaining principal, and monthly interest rate (annual rate ÷ 12). All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual rate to monthly?
A: Divide your annual percentage rate by 12 (e.g., 6% APR → 0.06/12 = 0.005 monthly rate).

Q2: Does this include taxes and insurance?
A: No, use only the principal and interest portion of your payment.

Q3: What if I make extra payments?
A: This calculator assumes regular payments only. Extra payments would shorten the payoff time.

Q4: Why does the result have decimal payments?
A: The calculation may result in partial payments, which means your final payment would be adjusted.

Q5: How accurate is this calculation?
A: It provides a theoretical payoff time assuming no changes to terms or payments.