The more information an amortization calculator gives you the more effective it will be. You can use this information to decide whether a longer term, a larger down payment, or an extra yearly payment is right for you. Use our amortization calculator to help you learn more about your new mortgage or apply online to contact a mortgage expert.
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The estimate from an amortization calculator may also be off due to a difference in how the calculator handles fractions of a penny and how your bank or lender handles such small amounts. The calculator is an excellent tool to utilize in order to see what your monthly payments may look like and to see a rundown of how these payments and how interest will act on the principal over the life of the loan, but it should be kept in mind that it is only an estimate.
Other calculators breakdown the principal and interest after every payment throughout the loan or can show that one extra yearly payment can decrease the interest paid over the life of the loan from $209,263 to $160,025 and the average monthly interest from $581 to $444.
Generally, amortization calculators work on the assumption that your interest rate is fixed and also that your payments are on time and equal. Delinquent payments or adjustable rates could possibly create a large difference between the estimate and actual amount. Also, if you are making one extra payment a year, the principal balance from year to year would change drastically from the principal on a loan without such a payment and you would need to use a calculator that allows you to enter that information. Many amortization calculators allow you to enter in an extra payment per year and show how much such a payment will affect your loan. Often, one extra payment a year can cut up to ten years from your loan.