Mortgage amortization is often a mystery to consumer. After all, they oftentimes watch as loan officers whip out their calculators and spill out complicated numbers in record time.
But most consumers, unless they work in an industry related to home buying and mortgage lending process, do not understand how loans are amortized. That’s okay—as a consumer it’s really not necessary for you to fully understand amortization process and how your monthly mortgage payments are determined.
However, it is important, if you are seeking a home mortgage loan or if you already hold one, to have a general understanding of mortgage amortization and how to figure monthly payments.
In short, by having a general comprehension of mortgage amortization, you will be a more informed mortgage consumer.
What Does It Do?
When a mortgage loan is amortized, amortization schedule is what will calculate amount of your monthly mortgage payment. A normal, or standard, mortgage amortization will allow for monthly mortgage payment to cover all interest accrued on loan in last thirty days since your last payment as well as a portion to be applied to original principal balance of home mortgage loan.
By following mortgage amortization schedule, borrower is paying off balance of mortgage loan principal, a little bit each month, and building equity into his home. It is not necessary for mortgage consumer to know mathematical formulas that are used in mortgage amortization in order to be able to answer common mortgage questions.
What is important is that you have a general understanding of mortgage amortization; that you understand ways that you can control or alter your mortgage amortization – allowing you to pay less for your home, and that you know what questions can be answered using a mortgage amortization schedule or a mortgage calculator.