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Extra Payment Formula:
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The Home Equity Extra Payment Calculator helps homeowners determine how quickly they can pay off their home equity loan by making additional monthly payments. It calculates the reduced payoff time when you pay more than the minimum required amount.
The calculator uses the loan payoff formula:
Where:
Explanation: This formula calculates how many months it will take to completely pay off a loan when making fixed monthly payments that include extra amounts beyond the minimum required.
Details: Making extra payments on your home equity loan can significantly reduce the total interest paid and shorten the loan term. Even small additional payments can save thousands of dollars in interest over the life of the loan.
Tips: Enter the principal amount, annual interest rate, and your total monthly payment (including any extra amount). All values must be positive numbers. The calculator will show how many months it will take to pay off the loan completely.
Q1: How much can I save by making extra payments?
A: The savings depend on your loan amount, interest rate, and the size of your extra payments. Generally, even $50-100 extra per month can save thousands and reduce the loan term by several years.
Q2: Should I pay extra principal or invest the money?
A: This depends on your loan interest rate vs. expected investment returns. If your loan rate is higher than what you can reliably earn investing, paying down debt is usually better.
Q3: Are there penalties for extra payments?
A: Most home equity loans allow extra payments without penalty, but check your loan agreement. Some loans may have prepayment penalties or restrictions.
Q4: How do extra payments affect amortization?
A: Extra payments reduce the principal faster, which means more of each subsequent payment goes toward principal rather than interest, accelerating payoff.
Q5: Should I make extra payments monthly or lump sums?
A: Regular monthly extra payments provide consistent principal reduction. Lump sums can also be effective, especially if you receive bonuses or tax refunds.