Amortization Schedules
If you've ever borrowed money from a bank or mortgage company, you’ve probably heard about amortization schedules. It’s a month by month schedule that shows precisely how your loan will be repaid. The amortization schedule lists the required payment on each specific date, how much of each payment is interest, and how much of each payment is applied to principal.
Some lenders include an amortization schedule in the documents you receive when you sign the loan documents. These schedules are also available on-line. For example, you can get a very nice schedule for free at the following website: http://ray.met.fsu.edu/~bret/amortize.html
When you create an amortization schedule on the internet, you’ll need to have available the following information:
1. The amount of your original mortgage
2. Your annual interest rate
3. The number of monthly payments per year (12)
4. The number of monthly payments you will make over the entire life of the loan.
You can use your amortization schedule to help you make prepayments of principal, to keep you up to date on your mortgage balance, and to verify that your lender has been properly giving you credit for each of your monthly payments.
Note: For detailed information about how to use your amortization schedule to make prepayments of principal, see my next article entitled “Prepaying Your Commercial Mortgage.”
