Mortgage Refinance Payoff Schedule Calculator

Amortization Formulas:

\[ I_k = B_{k-1} \times r \] \[ P_k = M - I_k \] \[ B_k = B_{k-1} - P_k \]

Current Loan Balance:

USD

Annual Interest Rate:

decimal

Monthly Payment:

USD

Remaining Term (months):

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1. What is a Mortgage Refinance Payoff Schedule Calculator?

Definition: This calculator shows the detailed amortization schedule for a refinanced mortgage, breaking down each payment into principal and interest components.

Purpose: It helps homeowners understand how their refinanced mortgage payments are applied and how the loan balance decreases over time.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas:

\[ I_k = B_{k-1} \times r \] \[ P_k = M - I_k \] \[ B_k = B_{k-1} - P_k \]

Where:

\( I_k \) — Interest portion of payment k (USD)
\( P_k \) — Principal portion of payment k (USD)
\( B_k \) — Remaining balance after payment k (USD)
\( r \) — Monthly interest rate (decimal)
\( M \) — Fixed monthly payment (USD)

Explanation: Each payment first covers the interest due on the outstanding balance, with the remainder applied to principal.

3. Importance of Refinance Payoff Schedule

Details: Understanding your payoff schedule helps you see the true cost of refinancing, how much interest you'll pay over time, and how quickly you're building equity.

4. Using the Calculator

Tips: Enter your current loan balance, annual interest rate (as decimal), monthly payment amount, and remaining term in months. The calculator will generate a month-by-month breakdown.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go toward interest?
A: This is normal amortization - interest is calculated on the outstanding balance, which is highest at the beginning.

Q2: How can I pay off my mortgage faster?
A: Making additional principal payments reduces your balance faster and decreases total interest paid.

Q3: What's the difference between rate and APR?
A: The rate is the interest charged, while APR includes fees and other loan costs for a true cost comparison.

Q4: When does refinancing make sense?
A: Typically when you can get a rate at least 1% lower than your current rate and plan to stay in the home long enough to recoup closing costs.

Q5: How does refinancing affect my taxes?
A: Mortgage interest remains deductible, but consult a tax professional as rules vary by situation.