Amortization Spreadsheets

From LoveToKnow Mortgage

Amortization spreadsheets contain long, complex calculations. Amortization is the calculation of interest on a loan over time.

Using Amortization Spreadsheets

In mortgage terms, an amortization schedule shows a loan holder how much interest and principal goes toward a loan each month over the course of the loan. You can use spreadsheets to do these calculations for you.

The most common amortization spreadsheets are those from Excel. Anyone can create them if they know the technical processes of doing so. You will find a variety of programs available online to purchase. Once you have a spreadsheet, you can begin using it.

  • Input your mortgage data into the system. This includes the mortgage loan balance, the interest paid and the length of the loan.
  • Calculate payment by using the PMT function found in Excel and most spreadsheets configured to do so.
  • Read the information that is calculated. This will tell you how much each monthly payment will be. It also gives you information on how much interest and principal each payment will include. At the very end, it will give you some potentially startling information: how much interest you will pay on this loan.

Using amortization spreadsheets can really give you a look at how expensive a mortgage can be to the average homeowner, even if the interest rate is low.

Reasons to Use Amortization Spreadsheets

There are many advantages to using these spreadsheets. If you already have a home loan, you can see the details of it. More importantly, if you are considering the purchase of a home using a mortgage, you can determine what the true cost of the home will be.

  • Can You Afford Payments? Use an amortization spreadsheet to find out how much monthly payments will be. Can you afford a home loan this expensive or should you select a home with a lower cost?
  • Does a Down Payment Help? A down payment at the time of purchase reduces your monthly payment and the amount of interest applied to the loan over time. Find out how much money a down payment will save you over the life of the loan.
  • Is Refinancing a Good Thing? Use amortization schedules to determine if refinancing your home is a good investment. You can put in various terms and interest rates and compare them to find the most affordable option.
  • Will Principal Payments Help? Principal added to your monthly payment may lower the amount of money paid over time. To see how it will affect your mortgage, use these spreadsheets. For example, an additional $100 added to your monthly payment could save thousands of dollars over the life of your loan.

Using these spreadsheets, you can see different scenarios play out. All you need to do is to use the preexisting formulas in the spreadsheet to do the calculations for you. It takes only a few minutes to compare loans using them.

Purchasing Amortization Spreadsheets

If you are a math whiz you may want to design your own spreadsheet. If you would rather avoid the mathematical computations and complex formulas, you may want to purchase a spreadsheet instead. There are also a variety of them available online free of charge.

Amortization Spreadsheets
  • Amortizationer.com provides several spreadsheets for downloading. This includes a balloon payment calculator spreadsheet and a simple interest Excel amortization spreadsheet. The Excel loan amortization download available is a template to help you create your own loan payment schedule.
  • The systematic guide offered at BeyondTechnology.com provides individuals with the process of creating an Excel spreadsheet. Here, individuals learn how amortization spreadsheets work. The guide is thorough but it does require payment.

Amortization spreadsheets are designed to show how a loan's interest and payments will play out over a period of time. Mortgage loans are costly, but these tools allow you to see all of the possibilities available.

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