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Mortgage Extra Payment Formula:
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The Mortgage Extra Payment Calculator helps homeowners determine their new monthly payment amount when adding extra payments to their mortgage. This simple calculation shows how additional payments can accelerate mortgage payoff and reduce total interest paid.
The calculator uses a simple formula:
Where:
Explanation: This straightforward calculation helps you understand the immediate impact of adding extra payments to your mortgage.
Details: Making extra mortgage payments can significantly reduce the total interest paid over the life of the loan and shorten the loan term. Even small additional payments can make a substantial difference in the long run.
Tips: Enter your current monthly mortgage payment and the additional amount you plan to pay. Both values must be positive numbers. The calculator will show your new total monthly payment amount.
Q1: How do extra payments affect my mortgage?
A: Extra payments reduce your principal balance faster, which decreases the total interest you'll pay and can shorten your loan term significantly.
Q2: Should I make extra payments or invest the money?
A: This depends on your mortgage interest rate vs. potential investment returns. Generally, if your mortgage rate is higher than expected investment returns, extra payments may be beneficial.
Q3: Are there any penalties for making extra payments?
A: Most mortgages allow extra payments, but some may have prepayment penalties. Check your loan agreement or consult with your lender.
Q4: How much can I save with extra payments?
A: The savings can be substantial. Even $100 extra per month on a 30-year mortgage can save thousands in interest and reduce the term by several years.
Q5: Should I specify that extra payments go toward principal?
A: Yes, always specify that additional payments should be applied to the principal balance to maximize the benefit.