1. What is Mortgage Amortization?

Mortgage amortization is the process of paying off a loan with regular payments over time. Each payment covers both interest and principal, with the interest portion decreasing and principal portion increasing over the life of the loan.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas:

Where:

• Monthly Interest Rate = Annual Rate / 12
• Monthly Payment is calculated using the PMT formula

3. Understanding the Amortization Schedule

Details: The schedule shows how each payment is split between principal and interest, and how the loan balance decreases over time. Early payments are mostly interest, while later payments are mostly principal.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show your monthly payment and a partial amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go toward interest?
A: This is how amortization works - interest is calculated on the outstanding balance, which is highest at the beginning.

Q2: How can I pay less interest overall?
A: Make extra principal payments or choose a shorter loan term to reduce total interest paid.

Q3: What's the difference between interest rate and APR?
A: APR includes both interest rate and other loan costs, giving a more complete picture of borrowing costs.

Q4: Does this calculator work for other types of loans?
A: Yes, it works for any fixed-rate amortizing loan (car loans, personal loans, etc.).

Q5: How does refinancing affect amortization?
A: Refinancing resets the amortization schedule, typically extending the loan term and changing the interest rate.