Amortization Schedule

More than one person who has taken out a simple interest loan has walked away thinking they cannot do anything about the terms of the deal. This is not the case. Mortgage amortization tables only tell part of the story. They are not legal documents but extra information provided by the lender to explain the fine details of the loan agreement. You can, however, use these tables to save yourself money when buying your home.

Mortgage amortization tables are similar to a mortgage amortization chart, and nothing more than visuals that show how a loan's servicing happens over time. When you make installments on a mortgage, your lender breaks them down to pay for interest charges and to reduce the principal amount. The money that goes on interest is high in the early years of the loan. It does, however, go down as the payments and years proceed. Amortization tables show visually how this works. Some of the myths that surround how these tables work and the impact extra payments can have on them include:

• Extra payments don't make a huge difference. Again, not true. Depending on the regularity of the extra payments, even a small amount added on to a monthly payment can make a big difference at the end of the loan period. To see the dramatic changes that can happen with mortgage amortization tables when you add even an extra $100 to a payment each month, a mortgage amortization calculator or program can be handy. The truth is a little extra money each month can take years off the life of a loan and reduce interest payout by thousands of dollars.
• You cannot change the mortgage tables. This is not true. If a loan involves a simple interest agreement, borrowers are free to pay as much more as they want at any given time. You can apply a large lump, for example, toward the principal. You can also send smaller payments added on to the regular installment and have the same outcome.
• Larger down payments don't impact the "big picture" all that much. All it takes is a comparison of mortgage amortization tables to see just how much of a difference a few thousand extra down can make over the life of the loan. It's just common sense the less money you borrow; the less money there is to charge interest against.

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