Real Estate Search Direct

You may think an amortization chart is something that only mortgage professionals can use.  Or you may not even know what an amortization chart is. If you are wondering what good is an amortization chart, you aren’t alone.

An amortization chart is very useful to help understand the payment structure of a mortgage.  This can be useful if you have a mortgage and are thinking of paying it down early.  You can analyze the benefit of making extra payments to your mortgage with the help of an amortization chart.

It can also help you when you are looking into getting a new mortgage, either for a home purchase or  a refinance.  If you are shopping for a mortgage, you will want to be able to understand the costs involved both up front and over the term of the mortgage.  An amortization chart can show you how much of each payment is going towards principal and how much will be paid in interest.

A basic amortization chart will use the principal amount (loan amount), the interest rate and the term (number of years to repay the loan).  From these numbers it can calculate the monthly payment.

Take a look at this example:

Let’s say you get a $100,000.00 loan for a 30 year term at 8% APR interest.  The loan payment would be calculated such that you are paying 1/12 of 8% of the remaining principal in interest each month, plus enough principal to pay off the loan over 360 months.
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Comments (1) Jul 05 2009

Mortgage brokers and lenders used to keep a laminated chart on their desks to check the payment amount for various loan amounts and interest rates.  This was called an Amortization Chart.  Have you checked and amortization chart lately?

Nowadays, amortization charts are computer generated and they will detail each and every mortgage payment, including how much is paid in interest and how much in principal throughout the term of the loan. 

Today’s amortization charts are much more flexible than the old style.  You can enter different loan terms,  various payment periods, discount points, balloon payments, pre-payments, any interest rate you can think of in many of the amortization chart calculators you find online.

You may wonder why you need an amortization chart.  After all, won’t the lender calculate your payments for you?

An amortization chart is the best way to see the total cost of the loan for comparison with other loans.  If you want to make sure you get the best loan, you have to be able to compare the overall costs.

You can calculate your own amortization charts with the Real Estate Search Direct Mortgage Payment Calculator. 

If you aren’t sure how much you can afford, you can start by creating a budget.  Money Tree Budget software will help you categorize your spending and set financial goals step by step.  You can get Money Tree Here.

Allen Davis
RealEstateSearchDirect.com

Comments (1) Apr 02 2009