It is important to understand that these figures are only estimates. An amortization chart can not foresee missed or late payments and can only be used loosely by those looking into loans with adjustable rates. Also, lenders may deal differently with fractions of a penny than our amortization chart which can cause variations in certain calculations. An amortization chart is best used as a tool to get a general idea of what your repayment schedule will be like, but should not be considered as dependable as information provided by your lender. Use our free amortization chart and apply online to contact lenders about your loan
Hear is an example of the information you would be able to get using an amortization chart. If you are buying a home priced at $162,000 and you are paying $12,000 down, the principal balance of your loan will be $150,000. At 7% interest, you will wind up with a monthly payment of $997 and an average monthly interest of $581. The interest paid in the first year will be $9,584, and the total interest paid over the life of the loan will be $209,263. However, if you adjust the information entered (for example, if you change the interest rate to 5% or the down payment to $6,000) the estimated monthly payments and accrued interest will be altered dramatically.
Amortization charts can help you decide on the following information:
- the length of term you want
- the minimum down payment you will need to give
- the highest interest rate you are willing to accept
- whether an extra yearly payment is worthwhile
Amortization charts can help you with other decisions as well. When you set up your loan repayment schedule, you can schedule in an extra payment each year. To you, one extra payment yearly may either sound like a small amount or far too much strain to put on your finances. An amortization chart can help you see whether or not one extra payment yearly will be worth the stress of paying out extra money. One extra yearly payment on the loan used above will change the average monthly interest from $581 to $444 and the total interest paid over the life of the loan from $209,263 to $160,025. Be careful; if you do not schedule in an extra payment at the start of your loan, you may be subject to prepayment fees if you pay off your loan before the expected date.