Most home mortgage loans in the United States are amortized. That is why mortgage applicants attempting to figure future payments with a common calculator get discouraged.
Amortization is simply a way of reducing a mortgage debt through monthly payments of principal and interest. That's why a mortgage loan payment calculator should actually be called an amortization calculator.
Kate Ford writes on mortgage calculator vs amortization calculator:
If you know these three things you can solve for PI. "P" stands for principal and "I" stands for interest. PI is normally expressed as a monthly mortgage payment of principal and interest.
As long as you have at least 3 out of 4 factors (term, interest rate, principal, payment) you can solve for the remaining factor.
Some online mortgage home calculators allow you to also view and even print out an amortization schedule.
An amortization schedule is simply a spread sheet showing monthly and/or annual payments. You can even see how much interest is being paid each month and the amount of principal you are paying down.
Posted April 24th, 2009 by Armen Hareyan
