1. What is Mortgage Amortization?

Mortgage amortization is the process of paying off a loan with regular payments over time. The remaining balance calculation shows how much principal is left after a certain number of payments have been made.

2. How Does the Calculator Work?

The calculator uses the amortization formula:

Where:

• \( PV \) — Initial principal (loan amount)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( k \) — Number of payments already made
• \( PMT \) — Monthly payment amount

Explanation: The formula accounts for both the growth of the principal due to interest and the reduction from payments made.

3. Importance of Remaining Balance Calculation

Details: Knowing your remaining balance helps with refinancing decisions, understanding home equity, and planning for early payoff.

4. Using the Calculator

Tips: Enter the original loan amount, annual interest rate, number of payments already made, and your monthly payment amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does my remaining balance sometimes increase?
A: If payments are too small to cover interest, negative amortization can occur, increasing your balance.

Q2: How does extra principal payment affect the balance?
A: Extra payments reduce principal faster, decreasing total interest paid and shortening the loan term.

Q3: What's the difference between principal and interest?
A: Principal is the loan amount borrowed, interest is the cost of borrowing that money.

Q4: How often should I check my remaining balance?
A: Check annually or when considering refinancing or making extra payments.

Q5: Does this work for all loan types?
A: This formula works for standard fixed-rate amortizing loans. Adjustable-rate or interest-only loans require different calculations.