The Numbers Game: How Knowing Your Mortgage Amortization Schedule Can Help

Principal, interest rates, and fixed terms… When purchasing a home, it may seem like you're being bombarded with numbers and percentages. Your loan officers calculate them and viola--you are given your monthly mortgage payment. Yet before you agree, learning the basics of the mortgage amortization process and how your payments are calculated can help reveal the mystery behind the numbers.

What Is the Amortization Calculator?

The first step to becoming an informed borrower is to understand how mortgage amortization is calculated. Amortization is the method by which your monthly payments are applied to both your principal and your interest, at a rate which leads to home ownership at the end of the loan period.

Homeowners seeking a stable mortgage plan with the same monthly payments should find an amortization schedule helpful. An amortization calculator takes the principal amount of the loan, the interest rate at which you are borrowing, and the length of the loan (i.e. 15 or 30 years) to figure out your monthly mortgage payment. The results also show how much interest and principal you are paying.

What are the Benefits of Using a Mortgage Amortization Calculator

Once an amortization schedule is set up, you can track the payments and the remaining balance on the loan. The amortization schedule is always listed in chronological order and shows the components of every payment until the loan is paid off.

Taking control of the numbers can help you find the best way to become a homeowner.

Sources:
US Department of Housing

Kristi Shibata
Kristi Shibata is a public relations and communication specialist. She graduated from University of California, San Diego, with a BA in Communications.