1. What is the Mortgage Payoff Calculator?

This calculator shows how making extra payments toward your mortgage principal can save you money on interest and help you pay off your mortgage faster. The formula calculates the interest savings between your original loan terms and the new terms with extra payments.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas:

Where:

• Original Interest — Total interest paid over the life of the loan with regular payments
• New Interest — Total interest paid when making extra payments each month
• Saved Interest — The difference between original and new interest amounts

Explanation: Extra payments reduce the principal faster, which reduces the amount of interest that accrues over time.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce the total interest paid and shorten the loan term. This calculator helps visualize those savings.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, loan term in years, and the extra amount you can pay each month. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Even $50-100 extra per month can save thousands in interest and reduce your loan term by years.

Q2: Should I pay extra principal or refinance?
A: It depends on your interest rate and how much you can pay extra. This calculator helps compare options.

Q3: Are there penalties for paying off early?
A: Most mortgages don't have prepayment penalties, but check your loan terms.

Q4: Is it better to make extra payments or invest?
A: This depends on your mortgage rate vs. expected investment returns. Paying off debt is a guaranteed return.

Q5: How often should I make extra payments?
A: Regular extra payments (monthly) have the greatest impact, but even occasional lump sums help.