How do you read a mortgage amortization chart?


Quick Answer

Use a mortgage amortization chart to determine how much of each monthly payment goes toward principal and how much applies to interest, notes Bankrate. Use a mortgage amortization calculator to produce an amortization chart by entering the mortgage amount, the term of the loan, the annual interest rate and the date the loan is initiated.

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Full Answer

Review a mortgage amortization chart to understand how each monthly payment affects total interest and the remaining balance of the loan, explains Bankrate. The chart lists the date of each payment, the payment amount, the principal and interest, the total interest paid and the remaining balance. Add an extra payment amount to an amortization calculator to modify the chart and find out how it affects the interest and principal amounts over the life of the loan.

Modify the amount of the monthly mortgage payment in an amortization chart to find out how early a mortgage can be paid off, states Bankrate. Use the chart to see how much interest has been paid since the loan was initiated, or the amount paid in a given year. Determine the amount of equity in a home by finding the amount of all debt remaining on the mortgage, and subtracting that amount from the current market value of the home.

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