A mortgage loan calculator with amortization schedule is designed to help people estimate how much they will have to pay every month on a particular mortgage or loan that they are considering. On top of that, it enables them to see how much of each payment goes to their interest, and how much of it goes to the principal. This allows them to make the right decision on whether to apply for the mortgage or not. These calculators are very easy to use and available online for free.
About the Mortgage Loan Calculator with Amortization Schedule:
Amortization is a schedule on which a particular loan is paid off. It means regular installments are made over a certain period of time, which go towards paying both the principal of a loan and its interest. Often, loans are self-amortizing, which means that a calculation has been made to ensure that, by the end of the term, the loan will be paid off in full. In the case of a fixed term loan, the breakdown of what is principal and what is interest is clear. With variable rate loans, it is not possible to give a breakdown in advance, as the interest rate can vary every month.
If you choose to have a fully amortized loan, you also will not experience the "payment shock" at the end of a loan, whereby not everything is paid off. If a loan is fully amortized, your principal balance will decrease every time a payment is made, and the interest payment will be slightly less at the next payment. However, in some cases, the interest payment is higher than the installment, in which case the loan is known as "negatively amortizing", leading to the principal balance increasing each time.
What to Do When You Have a Negative Amortization:
If you fear that you are in negative amortization, then it is vital that you use a mortgage/loan calculator with amortization schedule so that you have a clearer picture of just how much you owe, and how much that is growing by. If you do not do this, your principal will continue to grow indefinitely and you will end up with a huge payment to make at the end of your loan time.
Non-amortization Loans:
Non-amortization loans also exist, which are known as "interest only" loans. Here, there is no decrease at all in the value of the principal and, when the loan matures, the borrower will have to pay the full principal. This is known as a deferred interest program, or a balloon mortgage.
Calculating Your Own Amortization Schedule:
If you know how long your loan will run over, and how much in total you will pay back, you can calculate your own amortization schedule as well. Start by multiplying the entire balance of your loan by the interest rate. Subtract this from the total payment made, and this will tell you what the principal amount is. You then subtract this from the principal, and again calculate the monthly interest, and repeat. However, it is all too easy to make a mistake in your calculation at some point during this process, so it is better to use a computerized calculator instead, so that you know exactly what you are paying and towards what.
Mortgage Loan Calculator With Amortization Schedule:
To access a mortgage loan caluclator, click here.
