Mortgage Amortization Calculator. Buying a home is like the largest form of investment for some people. This is because of the huge price attached to houses, some people do request for a mortgage. However, a mortgage is like an amortized loan in which you can pay your debt over a period of time in installment.
The amortized period is said to be the chosen time In a year a borrower settles his debtor pays his mortgage.
However there are different types of mortgage, but the most popular ones are the 30 years fixed-rate mortgage, which gives many options to buyers, also the 25 years and 15 years mortgage.
When we talk about the amortization period, it’s not just the period the mortgage money is to be paid but also with the interest inclusive.
Moreover, when the amortization period is longer it requires a lesser monthly installment payment and a higher interest rate.
While at the other hand shorter amortization period requires higher monthly payment with a small interest.
It is important to anyone who seeks for a mortgage to know the type of amortization period he is to take to know which is best for potential savings.
How to Calculate Mortgage Amortization
- A Mortgage Amortization table calculator shows:
- It shows the amount of principal and interest paid in a payment.
- The total amount of principal and interest that has been paid at a particular date.
- The Amount of principal owned on a mortgage at a particular date.
- How much time will be taken off at the end of the mortgage when you make an extra payment.
This implies that you can use the mortgage amortization to
- Check the total amount of principal you owe now and also will be owning at a future date.
- determine how much more you need to pay monthly to cover up the mortgage in a shorter period, like let’s say 20 years instead of 25 years.
- To know the amount of interest you will have to pay over the life of the mortgage, or at a particular period maybe a year. Though this can change, depending on when your payments are received by the lender.
- It also determines the amount of equity you have.
How to calculate monthly mortgage payments
If you want to calculate your monthly mortgage payment. There is a formula you can use to do that manually: M= P[r(1+r)^n/((1+r)^n)-1)]
- M = the sum of your monthly mortgage payment.
- P = the principal loan amount.
- r = the interest rate you get monthly. Lenders will give you your yearly interest rate. So to get the monthly interest rate you need to divide that by 12 (which is the number of months we have in a year).
For example, if your interest rate is 10 percent. To get your monthly rate you need to divide by 12 and that will be 0.10/12 = 0.008333)
- n = number of payments to be made during the course of the loan’s lifetime. You have to multiply the total years in your loan by 12 (which is the number of months in a year) to determine the total number of payments for your loan.
For instance, 25 years fixed mortgage would have a total of 300 payments (25×12 = 300).