1. What is the Yahoo Mortgage Prepayment Calculator?

The Yahoo Mortgage Prepayment Calculator helps homeowners determine how much time they can shave off their mortgage by making extra payments. It calculates the reduced term in months based on your current balance, interest rate, regular payment, and any extra payments.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( \text{Balance} \) — Current mortgage balance in USD
• \( r \) — Monthly interest rate (annual rate / 12)
• \( \text{PMT} \) — Regular monthly payment amount
• \( \text{Extra} \) — Additional monthly payment amount
• \( \log \) — Natural logarithm function

Explanation: The formula calculates how many months faster you'll pay off your mortgage by making extra payments.

3. Importance of Prepayment Calculation

Details: Understanding the impact of extra payments helps homeowners make informed decisions about paying down their mortgage faster and saving on interest.

4. Using the Calculator

Tips: Enter your current mortgage balance, monthly interest rate (as decimal), regular payment amount, and any extra payment you plan to make. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Should I enter annual or monthly interest rate?
A: Enter the monthly rate (annual rate divided by 12) as a decimal (e.g., 0.0033 for 4% annual or 0.04/12).

Q2: How accurate is this calculator?
A: It provides a good estimate but doesn't account for changing interest rates, fees, or payment schedule variations.

Q3: What if I make a one-time lump sum payment?
A: This calculator assumes ongoing extra payments. For lump sums, you'd need to recalculate with the new balance.

Q4: Does this account for tax deductions?
A: No, the calculator doesn't consider potential tax benefits of mortgage interest.

Q5: Can I use this for other loans?
A: Yes, it works for any amortizing loan with fixed payments (car loans, personal loans, etc.).