Mortgage loan amortization is the process by which you will know how much you will be paying monthly for your mortgage loan. The amount will include the principal loan, interest, and the pre-determined dates for which you will pay off your mortgage.
Usually, when looking at your mortgage loan amortization, you will see an equal payment loan figure. That figure consists of your principal repayment and the loan interest as well. The common practice is that the interest payment is more significant than the principal payment in the beginning. But as time goes by, a more substantial chunk of your mortgage loan amortization goes to the principal amount.
Home loans usually come in a 15-year or 30-year fixed-rate mortgage, and because of that, they come in a fixed amortization schedule. But there are also the ARMs or adjustable-rate mortgages. When it comes to ARMs, the lender can adjust the rates, which will affect your mortgage loan amortization schedule. For more details on this, you can contact us, and we’d be happy to assist you in making your choice.
If you want to finish your loan mortgage pre-term, you can add extra payments and use our mortgage calculators, like the “What if I pay more calculator,” to help you get started. Making these additional payments can help you save money on your interest repayments and be debt-free sooner. You can even ask for your extra payment to be deducted from the principal amount so that your interest repayment becomes lower.
To better understand your mortgage loan amortization, you can ask lenders for a copy of a summary of your loan amortization and see how interest payments go down in time while your principal payment goes up. They should help you understand how your overall repayment is affected if you add an extra payment towards the principal amount. Contact us for more details, and we can help you understand how mortgage loan amortization works.