Keep in mind, the longer your term, the more you’ll pay in total cost.Īn amortization schedule or table gives you a visual countdown to the end of your mortgage. When you take out a mortgage to buy a house, you’ll agree to a specific amortization plan, or repayment plan, with your lender-usually a 15-year or 30-year term. As you pay down your mortgage, you'll pay less in interest. It's based on a percentage of your mortgage balance (the principal). This is a fee a lender collects for letting you borrow money. As you pay it back, your principal balance goes down and your equity (how much of the house you own) goes up. This is the original chunk of money you borrow from your lender to buy a house. But amortization is only concerned with two of those categories: Your monthly mortgage payment will go toward a number of different categories. In the mortgage world, amortization refers to the paying off of a loan over time through monthly payments. We’ll help you define what it means and walk you through a typical amortization schedule using our mortgage calculator so you’ll know how to pay off your house as fast as possible! Amortization isn’t exactly the most exciting subject. When your lender mentions an amortization schedule, your eyes might glaze over. Amortization-what a crazy word! This hard-to-say financial term pops up whenever you borrow money to buy big-ticket items like a house.
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