Mortgage Payoff Calculator

Every dollar of extra principal you send does two jobs at once. It reduces the balance, and because interest is charged on the balance, it also cancels every future month of interest that dollar would have generated for the rest of the loan. That second job is invisible on your statement and is where nearly all the saving comes from. This tool measures it by building two full schedules and subtracting one from the other. Both schedules start from what you actually owe now and what you actually pay now, not from the original terms of the loan. The recurrence follows Regulation Z Appendix J: charge the month's finance charge, then subtract the payment. Interest for a month is balance x annual rate / 1200, rounded to the cent, and the CFPB is explicit that a mortgage payment covers interest first with the remainder reducing principal. So principal for the month is your payment minus that interest, the balance drops, and the loop repeats. The baseline uses your current payment alone. The accelerated run subtracts your lump sum from the opening balance and then applies your payment plus the extra monthly amount, every month, until the balance reaches zero. Subtract the two payoff months to get months saved, and subtract the two interest totals to get interest saved. The counter-intuitive result is the ratio between what you put in and what you get out. Extra principal is not a rebate on interest, it is closer to an investment earning your note rate, tax-free, compounded monthly, for the remaining life of the loan. Money paid in year one avoids far more interest than the same money paid in year twenty, because it has more remaining months to work against. This is also why a lump sum applied today usually beats the same total dripped out monthly over a year: the balance falls sooner, so every subsequent interest charge is smaller. The second surprise is that saving accelerates as you go. The extra payment is a fixed dollar amount, but the balance it removes is bought at a shrinking cost, so each additional month knocked off the tail requires less than the one before it. The last few years of a mortgage carry very little interest, which means the months you delete are cheap months — the saving comes from removing the expensive early years of a term you no longer have to reach. Two guards matter. If your payment is less than or equal to the first month of interest, the balance never falls and the schedule is not an amortizing loan at all, so no rows are returned rather than pretending a payoff exists. And the walk is capped at 1,200 months — a hundred years — so a hostile or nonsensical URL can't spin the calculation. The final payment is trimmed to exactly what is owed, interest included, so the balance lands on zero and you can see that the last month costs less than a normal one. Two practical caveats. Extra principal does not move your automatic PMI termination date, because the Homeowners Protection Act ties that to the original schedule, though it can support an early cancellation request — the mortgage calculator shows the automatic date. And the payment used here is principal and interest only, so escrow for taxes and insurance continues unchanged. If your alternative is a lower rate rather than a bigger payment, price both against each other on the refinance calculator before committing the cash.