1. What is the Early Mortgage Payoff Calculator?

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

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

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( n' \) — Reduced number of payments
• \( P \) — Loan principal ($)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Regular monthly payment ($)
• \( E \) — Extra monthly payment ($)

Explanation: The formula calculates how many payments are needed to pay off the loan when adding extra payments each month.

3. Importance of Early Payoff Calculation

Details: Making extra payments can save thousands in interest and shorten your loan term significantly. This calculator helps visualize those savings.

4. Using the Calculator

Tips: Enter your loan amount, monthly interest rate (divide APR by 12), regular payment, and any extra amount you can pay. All financial values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: How do I find my monthly interest rate?
A: Divide your annual rate (APR) by 12. For example, 6% APR = 0.06/12 = 0.005 monthly rate.

Q2: Should I apply extra to principal or regular payment?
A: Specify with your lender that extra payments should go toward principal reduction.

Q3: How accurate is this calculator?
A: It provides a close estimate but may differ slightly from your lender's calculation method.

Q4: What's better - extra monthly or lump sum payments?
A: Monthly extra payments typically save more interest due to consistent principal reduction.

Q5: Will this work for other loans?
A: Yes, it works for any amortized loan (car loans, personal loans, etc.).