Amortization Schedule

It is a simple tool, but it is one that can save homebuyers much money over the life of a loan. A mortgage loan amortization table is nothing more than a document that shows the math involved in repaying a loan. Now, don't let the word "math" scare you because if you work with the included in this document, you can save money and pay off your loan faster than the time it takes to replace your roof.

The loan amortization tables lenders will give you before or at closing shows how things will work under the loan agreement. But you don't have to follow the lenders' tables after you get the money, and you move into your new home. Their papers show how each payment during the term of a loan, even a 30-year mortgage, will apply toward paying down principal and paying interest charges, too. However, it works to the lenders' advantage to have you follow their plan. But you should think creatively and save some money while financing your major investment.

You should not see tinkering with your lender's amortization table as an illegal act, it is not. You can legally "rework" a simple interest loan to suit your financial goals. This doesn't mean that you can avoid repaying your loan. It also doesn't mean that some interest charges won't apply. What it does mean is you can reduce your cost of borrowing if you follow a few tried and tested steps. Here are steps you can take to make mortgage loan amortization work in your favor, while keeping your promise to repay your home loan:

• Occasional extra payments. Tacking on an extra payment to the outstanding principal can work wonders to your total costs. Even an extra $1,000 a year can make a big difference in the term of a loan, and the overall payout when taking interest charges into account.
• Regular extra payments. Even an extra $40 or $50 a month added to a mortgage payment that you apply to reduce the principal can make a big difference over the long run. These payments won't make a big difference at first, but they add up fast, especially if you make them regularly.
• Biweekly plan. This is an extra payment plan that has a borrower paying a full mortgage payment every two weeks. Some lenders will set this up as "law," but borrowers can give themselves the leeway to skip these payments by simply setting up the plan themselves. This can cut the a loan's term dramatically and reduce total interest payments by a small fortune.

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