1. What is the Mortgage Payoff Calculation?

The mortgage payoff calculation determines the remaining balance on a loan after a certain number of payments have been made, using the amortization formula. This helps borrowers understand how much they would need to pay to completely settle their mortgage.

2. How Does the Calculator Work?

The calculator uses the amortization payoff formula:

Where:

• \( P \) — Original principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in months)
• \( p \) — Number of payments already made

Explanation: The formula calculates the remaining balance by determining what portion of the original principal remains unpaid after p payments.

3. Importance of Payoff Calculation

Details: Knowing your payoff amount is essential for refinancing, selling your home, or making extra payments. It helps in financial planning and understanding your equity position.

4. Using the Calculator

Tips: Enter the original loan amount, monthly interest rate (as decimal), total loan term in months, and number of payments already made. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual rate to monthly?
A: Divide the annual percentage rate by 12 (months) and by 100 (to convert from percentage to decimal).

Q2: Does this include escrow or insurance?
A: No, this calculates only the principal and interest portion. Contact your lender for total payoff including escrow.

Q3: Why is my payoff different from my statement?
A: Statements may include per-diem interest or fees. This calculator shows principal balance only.

Q4: How does extra payments affect payoff?
A: Extra payments reduce principal faster, decreasing total interest and shortening loan term.

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