1. What is the Mortgage Payoff Calculator?

The Mortgage Payoff Calculator calculates the remaining balance on a mortgage loan after a certain number of payments have been made. It helps homeowners understand how much they still owe and plan their financial future.

2. How Does the Calculator Work?

The calculator uses the mortgage payoff formula:

Where:

• \( P \) — Principal loan amount ($)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Total number of payments (months)
• \( p \) — Number of payments made (months)

Explanation: This formula calculates the remaining balance by comparing the total loan amount with the portion that has been paid off through regular payments.

3. Importance of Mortgage Balance Calculation

Details: Knowing your remaining mortgage balance is crucial for refinancing decisions, selling your home, planning early payoff strategies, and understanding your net worth.

4. Using the Calculator

Tips: Enter the original principal amount, monthly interest rate (as a decimal), total number of payments, and number of payments already made. Ensure all values are positive and payments made don't exceed total payments.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual interest rate to monthly?
A: Divide the annual rate by 12. For example, 6% annual = 0.06/12 = 0.005 monthly rate.

Q2: What if I made extra payments?
A: This calculator assumes regular scheduled payments. For extra payments, you would need a more advanced amortization calculator.

Q3: Can I use this for other types of loans?
A: Yes, this formula works for any amortized loan with fixed payments, including car loans and personal loans.

Q4: Why is my balance not decreasing linearly?
A: In the early years, more of your payment goes toward interest, so principal reduction is slower. This is normal amortization.

Q5: How accurate is this calculation?
A: Very accurate for fixed-rate mortgages with consistent payments. It matches standard amortization schedules used by lenders.