What You Need to Know About Amortization?

Amortization is to pay off your debt with time in the equal installments. The part of every payment goes in its loan principal, and some goes toward the interest. With the mortgage loan amortization, amount that goes toward the principal starts small, and slowly grows higher. In the mean time, amount that goes toward the interest declines every month for the fixed-rate loans. The amortization schedule adding extra payments helps you know how much money that you have paid in principal & interest with time. This calculator will help you see how the payments break down on the loan term.

Shorter Amortization Saves Money

Suppose you go with the shorter amortization period—like, 15 years—then you will have the higher monthly payments, however you will save huge on the interest over your loan life, and you can get your home much sooner. The interest rates on the shorter loans are generally lower than compared to the longer terms. It is one good strategy that you must apply if you can meet the monthly payments without any undue hardship.

amortization schedule with extra payments

Though this amortization period is a bit shorter, still it involves making over 180 sequential payments. Thus, it is very important that you to consider if you can maintain this level of payment. The monthly mortgage payment can be allocated in two main parts: the principal and interest. Depending upon how you have setup your loan, you can pay real estate taxes, PMI, or homeowners insurance with the mortgage payment.


When you start on a right note and ensure you may afford the mortgage payment, you will not need to worry much about results of not paying. If you are in a middle of the mortgage payment crisis, take help of your mortgage lender & third parties.