Using mortgage calculators for creating and amortization schedule

Using mortgage calculators can assist with determining a variety of information useful for making financial decisions. Amortization is a mathematical process in which your mortgage amount is reduced and interest applied with each payment. Using a loan amortization calculator can assist with making decisions including:

  • Choosing a mortgage repayment term: 30-year mortgages provide lower monthly payments, but if you can afford a 15-year mortgage with a higher monthly payment, it's possible to save thousands of dollars in interest paid over time.
  • Prepaying principle: An amortization schedule can be useful for planning to pay off your mortgage faster. If you're planning to pay down your principle with a large lump sum, check your mortgage documents for any pre-payment penalties. Mortgage principle prepayments are sometimes called "principle curtailments."
  • Refinancing from a 30-year mortgage to a 15-year mortgage: Using a mortgage comparison calculator and an amortization schedule assists with estimating potential benefits of paying off your mortgage loan sooner.

The first years of making ""interest and principle payments

A fascinating aspect of amortization schedules is seeing how each of your monthly P&I payments is applied to interest and principle. During the first years of repaying your mortgage, most of your P&I payment is applied to mortgage interest; as you continue paying your mortgage over the years, amortization eventually applies the majority of your payments toward principle, which is the actual loan balance. This is when you begin to see real progress toward paying off your mortgage.

An amortization calculator can also help with determining how much additional you'll need to pay each month if you want to pay off your mortgage sooner than its termination date. Using a mortgage comparison calculator is helpful for determining the advantages of lower mortgage rates. Today's lower mortgage rates are providing buyers and homeowners seeking refinancing with affordable mortgage options that can maximize savings on interest paid over time.

Mortgage refinance rates: Don't forget to calculate closing costs and lender fees

When determining savings for a particular mortgage, it's important to factor in closing costs and and deduct them from estimated savings shown by the mortgage comparison calculator.

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