Loan Calculator Amortization
Whether applying for a mortgage or any other type of loan, it’s imperative that you equip yourself with a full understanding of the financial agreement. A loan calculator for amortization is one of the most valuable tools.
A mortgage broker in Fort Lauderdale can guide you through the process, but an amortization loan calculator puts the control in your hands during the preparation phases.
What is it?
The term amortization simply means that a loan will be repaid over multiple periods. Lenders use amortization schedules to establish the monthly repayment installment plan to ensure the balance has been repaid by the loan maturity date.
In most cases, a larger percentage of the early monthly repayments are used to cover the interest. But later payments enjoy a smaller interest percentage, which means the principal loan amount falls quicker.
When considering loan programs and other financial lending, our tool provides a clear insight into how much is repaid during each period of the overall agreement. In turn, this helps applicants make calculated choices before applying for a loan.
Who can use it?
Our tool can be used by both single applicants and dual applicants for a variety of loan types, including mortgages. The tool can be used prior to making applications in a bid to analyze different products. It can additionally be used when formally applying to borrow money as a way to confirm the repayment plan and schedule.
To learn more about our tool and how it impacts the loan, get in touch today.
Whether applying for a loan or any other type of loan, it’s imperative that you equip yourself with a full understanding of the financial agreement. Our tool is one of the most valuable tools you can use to get a generic overview. It will show you how much money you will pay over time, and may allow you to compare different terms and savings.
A mortgage broker in Fort Lauderdale can guide you through the process, but an amortization loan calculator puts the control in your hands during the preparation phases.
Why Use our Tool?
The calculator will show you how your payment is repaid over time, by separating out principal vs interest in your mortgage payment. Lenders use amortization schedules to establish what is owed on the plan. The amortization schedule is subsequently presented as a table.
While the monthly repayments made on a mortgage or loan are usually the same for each month of the term agreement, the account balance does not fall by the same level each month - this is due to the fact you will simultaneously be paying off the principal sum and the interest total.
Lenders should show the amortization schedule when taking out a mortgage and it should allow you to see the total cost of interest, monthly repayments, and other key features at a glance.
What does it show?
Loan amortization schedules are designed to track how much is owed at the start (or current state) of the cycle while also accurately forecasting what the loan will look like at each stage until it reaches full maturity.
Our tools use a schedule that essentially shows a clearer and more detailed breakdown of the proposed term of an agreement. It can break down the monthly repayment schedule to display the following
- How a particular payment is split into principal and interest payments,
- How much the principal figure is/will be at a chosen date,
- The level of principal and interest that have/will be paid at a chosen date.
- The impact that an early or extra payment will have on a loan or mortgage schedule.
In turn, a loan amortization tool can be used to determine how much principal is owed (or will be owed), as well as the amount of interest paid over the term of a mortgage or calculate the amount of equity held (or will be held) at a certain date. Many people will, therefore, consult a mortgage broker to go over an amortization schedule when considering an early pay-off or other major change.
It can additionally highlight the contrast in interest payments over the term of the loan, which helps applicants analyze two different durations - such as a 25-year term versus a 30-year term.
The amortization formula
Most people can quickly understand what the amortization does and how it works. However, it is highly beneficial to know how the schedule and figures are calculated - even if actively completing the sums is far too much work compared to using an online tool. The formula for your monthly payment is as follows:
Monthly payment = P[r(1+r)^n/((1+r)^n)-1)]
In this case, ‘P’ stands for the principal amount (for example, the cost of your debt). The ‘r’ is your monthly rate (which is calculated by dividing your annual rate by 12). The ‘n’ stands for the number of monthly repayments on the debts term time.
Meanwhile, the formula for a principal payment is:
P = Monthly Payment - [Current Balance - r]
Understanding this information is helpful, although it’s unlikely that you’ll ever complete the calculations manually.
Who can use One?
Our tool can be used by both single applicants and dual applicants for a variety of debt types, including mortgages. The tool can be used prior to making applications in a bid to analyze different products. It can additionally be used when formally applying to borrow money as a way to confirm the repayment plan and schedule.
Debtors may additionally opt to use an amortization schedule when negotiating the renewal terms on debt or other long-term debt that has come to the end of its fixed-rate window. This may cover negotiations with the existing lender or prospective new lenders.
How to use our Tool?
The process of actively using our tool is easy. An online tool will complete the mathematical equations to provide an instant calculation. All you need to do is enter the appropriate details.
On an amortization spreadsheet, such as one you can do yourself in an Excel spreadsheet, as it has a premade template already. Once the start date (or proposed start date) has been entered, the tool will present a clear breakdown that shows the monthly figures from year one through to the estimated payoff date. The following aspects will be detailed;
- The date (when a monthly repayment is set to be made),
- The payment (which will be the same each month),
- Principal payment for the selected month.
- Interest payment for the selected month,
- The total interest at that given point in the schedule,
- The mortgage balance at that stage in the schedule.
The relevant information will be clearly displayed while submitting a new calculation, using new input data, instantly updating the figures in each column.
Alternatively, mortgage originators may complete the calculations on your behalf when looking at prospective applications. Either way, a full understanding of the amortization schedule will help applicants analyze their options and make a calculated decision about which product is right for them. Furthermore, it will support them with their overall financial management strategies. The methodology can also be helpful when you also want to sell your property and want to calculate a mortgage payoff.
To learn more about loan calculator amortization and how it impacts the debt, contact us to see how you may benefit from refinancing.