1. What is a Mortgage Calculator With Amortization?

Definition: This calculator shows the monthly payment breakdown (principal and interest) and provides a complete amortization schedule for a mortgage.

Purpose: It helps homeowners and buyers understand how their mortgage payments are applied over time and how much interest they'll pay.

2. How Does the Calculator Work?

The calculator uses these amortization formulas:

Where:

• \( I_k \) — Interest portion of payment for period k (USD)
• \( P_k \) — Principal portion of payment for period k (USD)
• \( B_k \) — Remaining balance after payment k (USD)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Total monthly payment (USD)

Explanation: Each payment is split between interest and principal, with the interest portion decreasing and principal portion increasing over time.

3. Importance of Amortization

Details: Understanding amortization helps borrowers see the true cost of their loan, plan for refinancing, and make informed decisions about extra payments.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show your monthly payment and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go toward interest?
A: This is how amortization works - interest is calculated on the outstanding balance, which is highest at the beginning.

Q2: How can I pay less interest overall?
A: Make extra principal payments, choose a shorter loan term, or refinance at a lower rate when possible.

Q3: What's the difference between interest rate and APR?
A: APR includes both interest rate and other loan costs, giving a more complete picture of borrowing costs.

Q4: How do extra payments affect my loan?
A: Extra payments reduce principal faster, saving interest and potentially shortening the loan term.

Q5: What happens if I change my payment amount?
A: The amortization schedule will change - you can recalculate with different terms to see the impact.