An amortization program is a kind of computer software that calculates an approximate monthly mortgage payment based on the amount of the loan and the interest rate. Such programs also determine how much of the payment applies to the principal of the loan and how much goes to interest.
An amortization program is actually a type of calculator. When one enters any three known values among the loan amount, loan term, interest rate and mortgage payment, the calculator reveals the fourth and unknown value. The monthly mortgage payment is based strictly on the other three criteria and does not take into consideration taxes and insurance payments that go into escrow.