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Date Created: 12/19/15
Amortization Schedule Calculator mortgage calculator Understanding an amortization schedule by using my free mortgage calculator A mortgage amortization schedule is broken down on a monthly basis to show you exactly what youre paying the bank each month and how much you still owe I could probably survey 100 people and 50 of them wouldnt even know how much they owe on their mortgage These people are going to be taken advantage of at some point in the mortgage process With some basic knowledge on mortgage calculators and interest rates you can understand when someone might be trying to trick you Your mortgage is recalculated each month based on how much principal is paid down Your mortgage payment will always stay the same, but the principal goes up and the interest will come down as time goes on Example below: Enter this information into my mortgage calculator Mortgage amount - $100,000 00 Fixed Interest Rate - 6 0% Years - 30 Based on that information you will see that the monthly mortgage payment is $599 55 and over the course of 30 years you will have paid $115,838 19 JUST in interest! Thats more than the cost of the home itself! Its only natural to try and reduce that ridiculous number! First, we need to understand it by looking at the information from the mortgage calculator The graph below shows you the breakdown of each payment you make over the first few months Monthly Payment - $599 55 Month -Interest - Principal - Remaining Balance $100,000 00 Month 1 - $500 00 - $99 55 - $99,900 45 Month 2 - $499 50 - $100 05 - $99,800 40 Month 3 - $499 00 - $100 55 - $99,699 85 First of all, in the amortization schedule the Interest payment and principal payment columns will always equal your monthly payment amount of $599 55 Some of it will go toward the $100,000 that you owe, and the rest of it goes toward interest Heres how it works Notice that the amount you owe is lowered by the amount of principal you pay each month (100,000 - 99 55 = 99,900 45) If you pay an extra $200 00 toward principal then it would be 100,000 - 99 55 - 200 00 = 99,700 45 The interest payment goes to the bank for loaning you that specific amount of money The bank tells you the yearly interest rate (6%) for added confusion because its actually calculated monthly Take your yearly interest rate and divide it by 12 (12 months) You can plug those numbers into my free mortgage calculator or see the graph above 6% / 12 months = 0 50% per month So you owe 100,000 x 005 ( 50%) = $500 00 in interest for the first month (See above graph) So the less money you owe the bank, the less interest you pay each month Thats why paying principal down faster is better Like I said before, each month the mortgage payment is recalculated so the amount of principal you pay each month is up to you! No matter how you look at it, you owe the bank $100,000 00 and while you owe that money they want something in return (Interest) I believe banks are very fair with the interest rates they offer, whatever they might be Otherwise you would have to save $100,000 00 to buy a home, rather than just the down payment, which means most people wouldnt ever buy a home at all Please email me with any mortgage calculator questions you might have about an amortization schedule, an interest rate or a mortgage calculator and Ill do my best to answer them mortgage calculator
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