Home
Back
Mortgage Payment Formula:
| From: | To: |
The House Mortgage Calculator Bankrate Extra Payment helps homeowners calculate their adjusted monthly mortgage payment when making extra payments. This tool shows how additional payments can reduce your monthly obligation and overall loan term.
The calculator uses the mortgage payment formula with extra payment adjustment:
Where:
Explanation: The standard payment is calculated based on loan amount, interest rate, and term. The extra payment reduces the principal faster, which can lower subsequent payments or shorten the loan term.
Details: Making extra mortgage payments can significantly reduce the total interest paid over the life of the loan and help build equity faster. This calculator helps homeowners plan their payment strategy effectively.
Tips: Enter your loan amount in dollars, annual interest rate as a percentage, loan term in years, and the extra payment amount you plan to make. All values must be positive numbers.
Q1: How do extra payments affect my mortgage?
A: Extra payments reduce your principal balance faster, which decreases the total interest paid and can shorten your loan term.
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, paying down debt may be better.
Q3: Are there prepayment penalties?
A: Some mortgages have prepayment penalties. Check your loan agreement before making extra payments.
Q4: How much can I save with extra payments?
A: Even small extra payments can save thousands in interest over the life of the loan. The exact amount depends on your loan details and payment amount.
Q5: Should extra payments be applied to principal only?
A: Yes, specify that extra payments should be applied to principal to maximize interest savings.