1. What is the Ramsey Prepayment Method?

The Dave Ramsey mortgage prepayment method involves making extra principal payments to pay off your mortgage faster. This approach can save thousands in interest and shorten your loan term significantly.

2. How Does the Calculator Work?

The calculator uses the Ramsey prepayment formula:

Where:

• \( Balance \) — Current mortgage balance (USD)
• \( PMT \) — Regular monthly payment (USD)
• \( Extra \) — Additional monthly principal payment (USD)

Explanation: The formula calculates how many months it will take to pay off your mortgage by dividing your current balance by your total monthly payment (regular payment + extra payment).

3. Benefits of Mortgage Prepayment

Details: Making extra payments can save significant interest costs and build equity faster. Even small additional payments can shorten your loan term by years.

4. Using the Calculator

Tips: Enter your current mortgage balance, regular monthly payment, and any additional payment you plan to make. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How accurate is this calculator?
A: This provides a simplified estimate. Actual payoff may vary slightly due to interest calculations and potential changes in terms.

Q2: Should I pay extra on my mortgage?
A: Dave Ramsey recommends paying off all debt, including mortgages, as quickly as possible after establishing an emergency fund.

Q3: How much should I pay extra?
A: Any amount helps, but Ramsey suggests at least $100 extra per month if possible.

Q4: Does this account for interest?
A: This is a simplified calculation that assumes your extra payments go entirely to principal.

Q5: Can I use this for other loans?
A: Yes, the same principle applies to any amortizing loan (car loans, student loans, etc.).