What is a Mortgage Amortization Schedule?

Autumn Rivers

A mortgage amortization schedule is a table that shows the amount of the payment that goes toward interest on a mortgage loan, and the amount that is put toward the principal. Such a schedule also shows the remaining balance of the loan. It can often be viewed in terms of months or years.

How much of a payment goes toward principal and interest is determined by a mortgage amortization schedule.
How much of a payment goes toward principal and interest is determined by a mortgage amortization schedule.

With an amortizing loan, more interest is paid in the first years of the loan than principal. In fact, during the first 18 years of a 30-year mortgage, more of the payment is applied to the interest than principal. The last 12 years of such a loan apply the majority of the payment toward the principal.

Most mortgage amortization schedules do not account for changes like late fees and variable interest rates.
Most mortgage amortization schedules do not account for changes like late fees and variable interest rates.

If the bank does not supply the homeowner with an updated mortgage amortization schedule often enough, one can be created using simple computer programs. Microsoft Excel®, for example, offers a template that can be downloaded from the company's website. The necessary information to create an amortization schedule includes the loan amount, load period, annual interest rate, amount of payments made in a year, and the loan's start date. Plugging the numbers into a template can make it simple to keep track of the loan's numbers.

Although the majority of schedules are monthly, because most people pay their mortgage once per month, some people choose to use a biweekly amortization schedule. This involves making half a payment twice a month. This can both save on interest and reduce the loan term. There are free downloads that can help calculate the savings that are available through this method.

One thing to keep in mind is that most mortgage amortization schedules do not account for changes like late fees and variable interest rates. This can affect their accuracy, which is important to remember when planning. Some loan amortization schedules, however, do have space to enter extra payments, which is perfect for homeowners who overpay regularly.

No matter how one chooses to keep track of mortgage payments, it is important to do so throughout the life of the loan. Knowing exactly how much interest has been paid, how much has gone to principal, and the balance on the loan is helpful for future planning. Considering that interest paid on a mortgage loan can be deducted from the amount owed on taxes in the US, it is especially handy for homeowners to have a mortgage amortization schedule at their fingertips come tax season. The ability to plan for the future when it comes to finances is also much easier when one has an updated mortgage amortization schedule.

With an amortizing loan, more interest is paid in the initial years of the loan than principal.
With an amortizing loan, more interest is paid in the initial years of the loan than principal.

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