Learn About Mortgage Amortization
If the concept of mortgage amortization seems too complex to fully understand, don't worry. Once you understand the basics behind amortization -and realize that there are plenty of helpful resources available to simplify amortization- it won't seem nearly as difficult to understand.
Mortgage Amortization Explained
What is mortgage amortization? The term amortization refers to a payment schedule that includes a set monthly payment that is applied toward the principal and interest. Reviewing an amortization schedule for your mortgage will reveal several important things you need to know:
- What will my monthly mortgage payment be?
- How will the payments be divided into principal and interest?
- How much quicker will my mortgage be paid off with extra payments?
- How will my mortgage balance evolve over time?
Learning about the amortization of your mortgage loan can help you to understand the huge impact that extra payments can have on the overall cost of your loan.
Run an amortization schedule before you obtain a home loan to figure out how much your monthly mortgage payments will be. After you obtain a mortgage, you can use an amortization schedule to how much extra you should pay each month in order to knock years off the length of time it takes you to pay the loan off in full.