Mortgage Calculator Lump Sum Extra Payment

New Term Formula:

\[ \text{New Term} = \frac{\log(1 + (\text{Balance} - \text{Lump}) \times \text{Rate} / \text{Monthly})}{\log(1 + \text{Rate})} \]

Current Balance:

Lump Sum Payment:

Monthly Interest Rate:

decimal

Monthly Payment:

$/month

New Term (months):

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1. What is a Mortgage Lump Sum Extra Payment Calculator?

Definition: This calculator determines how a lump sum payment affects your mortgage term by calculating the new remaining term in months.

Purpose: It helps homeowners understand how extra payments can shorten their mortgage duration and save on interest.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ \text{New Term} = \frac{\log(1 + (\text{Balance} - \text{Lump}) \times \text{Rate} / \text{Monthly})}{\log(1 + \text{Rate})} \]

Where:

New Term — Remaining loan term in months
Balance — Current mortgage balance ($)
Lump — Extra lump sum payment ($)
Rate — Monthly interest rate (decimal)
Monthly — Regular monthly payment ($)

Explanation: The formula calculates how many months of payments would be needed to pay off the reduced balance at the same monthly payment amount.

3. Importance of Lump Sum Payments

Details: Extra payments reduce principal faster, shortening loan term and saving significant interest over time.

4. Using the Calculator

Tips: Enter your current mortgage balance, lump sum amount you plan to pay, monthly interest rate (divide APR by 12), and your regular monthly payment.

5. Frequently Asked Questions (FAQ)

Q1: How do I find my monthly interest rate?
A: Divide your annual rate by 12 (e.g., 6% APR = 0.06/12 = 0.005 monthly rate).

Q2: Does this account for escrow payments?
A: No, use only the principal+interest portion of your payment.

Q3: Why does the result show whole months?
A: We round up to the nearest full month since partial months aren't practical.

Q4: What if my lump sum exceeds my balance?
A: The calculator won't process amounts that would pay off the loan completely.

Q5: How accurate is this calculation?
A: It provides a close estimate but consult your lender for precise figures.