1. What is the Early Payoff Calculator?

This calculator determines how much time and money you can save by making additional principal payments on your mortgage or loan. It shows the new payoff date and total interest savings when you make extra payments.

2. How Does the Calculator Work?

The calculator uses an iterative amortization algorithm:

Where:

• \( P \) — Principal amount (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Original number of months
• \( \text{extra} \) — Additional payment amount (USD)

Explanation: The calculator recalculates the amortization schedule with your extra payments to determine the new payoff date and interest savings.

3. Importance of Early Payoff Calculation

Details: Making extra payments can significantly reduce the total interest paid and shorten your loan term. Even small additional amounts can lead to substantial savings over time.

4. Using the Calculator

Tips: Enter your loan principal, interest rate, term, and the additional amount you plan to pay each month. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on your loan amount, interest rate, and how much extra you pay. Even $50-100 extra per month can save thousands in interest.

Q2: When should I start making extra payments?
A: The earlier you start, the more you'll save. Extra payments in the first years have the greatest impact as more of your payment goes toward interest initially.

Q3: Should I pay extra or invest instead?
A: This depends on your interest rate vs. expected investment returns. Paying off debt gives a guaranteed return equal to your interest rate.

Q4: Can I stop extra payments later?
A: Yes, extra payments are typically voluntary unless you've arranged a recast or other modification with your lender.

Q5: Do extra payments reduce my monthly payment?
A: No, your required payment stays the same, but more goes toward principal, reducing the loan term.