1. What is the Mortgage Payoff Equation?

The mortgage payoff equation calculates how many months it will take to fully pay off a mortgage given the current balance, monthly payment, and interest rate. This helps homeowners understand their repayment timeline.

2. How Does the Calculator Work?

The calculator uses the mortgage payoff equation:

Where:

• \( PMT \) — Monthly payment amount (USD)
• \( Balance \) — Current loan balance (USD)
• \( r \) — Monthly interest rate (decimal)

Explanation: The equation calculates the time required to pay off the loan by considering the relationship between payments, balance, and compounding interest.

3. Importance of Payoff Calculation

Details: Knowing your payoff timeline helps with financial planning, deciding whether to refinance, and understanding the impact of extra payments.

4. Using the Calculator

Tips: Enter your regular monthly payment, current loan balance, and monthly interest rate (annual rate divided by 12). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What if I make extra payments?
A: Extra payments will reduce the payoff time. You can recalculate with your new higher payment amount.

Q2: How do I convert annual rate to monthly?
A: Divide your annual percentage rate (APR) by 12 (months) and by 100 (to convert from percentage to decimal).

Q3: Why does my result show "Invalid input"?
A: This happens when your payment is less than the monthly interest (Balance × r), meaning you'll never pay off the loan.

Q4: Does this account for property taxes and insurance?
A: No, this calculates principal and interest only. Your actual payment may include escrow items.

Q5: How accurate is this calculation?
A: It assumes fixed-rate payments. For ARMs, results will change when rates adjust.