Amortization Schedule
What Is an Amortization Schedule?
An amortization schedule is a table that shows you how long it will take to pay off your mortgage over time through monthly payments. This schedule follows the payment agreement plan –typically a 15- or 30-year term– that you have worked out with your lender.
When a borrower takes out a loan to pay for a home, car, or other purchases, they typically make a payment at the same time each month. Part of the payment covers the interest due on the loan, and the rest goes toward reducing the principal loan amount.
An amortization schedule (also called an amortization table) shows how this process works over time and what the lender owes on any given month if they follow the plan.
What You Need to Know About an Amortization Schedule
The amortization schedule is based on the following components of your home loan agreement:
- Principal. The principal is the amount of money you borrow from your lender to buy the home. As you pay back the loan, the principal balance goes down, and your equity in the home goes up.
- Interest. The interest is the fee the lender charges for lending you the money to buy the home. The amount is based on a percentage of the principal.
In most cases, the bank or lending institution provides the borrower with the amortization schedule at the time all parties sign the personal loan agreement. Usually, the lender provides the balance owed after each monthly payment, so the borrower can see the total debt decreasing as they repay the loan. The document typically includes a summary of all interest payments throughout the loan period.
Start a Personal Loan Agreement now
Sometimes, the amortization schedule includes additional fees such as:
- origination fees
- closing costs
- early payment penalties
- property tax
- mortgage insurance
What Is an Amortization Schedule?
An amortization schedule is a table that shows you how long it will take to pay off your mortgage over time through monthly payments. This schedule follows the payment agreement plan –typically a 15- or 30-year term– that you have worked out with your lender.
When a borrower takes out a loan to pay for a home, car, or other purchases, they typically make a payment at the same time each month. Part of the payment covers the interest due on the loan, and the rest goes toward reducing the principal loan amount.
An amortization schedule (also called an amortization table) shows how this process works over time and what the lender owes on any given month if they follow the plan.
What You Need to Know About an Amortization Schedule
The amortization schedule is based on the following components of your home loan agreement:
- Principal. The principal is the amount of money you borrow from your lender to buy the home. As you pay back the loan, the principal balance goes down, and your equity in the home goes up.
- Interest. The interest is the fee the lender charges for lending you the money to buy the home. The amount is based on a percentage of the principal.
In most cases, the bank or lending institution provides the borrower with the amortization schedule at the time all parties sign the personal loan agreement. Usually, the lender provides the balance owed after each monthly payment, so the borrower can see the total debt decreasing as they repay the loan. The document typically includes a summary of all interest payments throughout the loan period.
Start a Personal Loan Agreement now
Sometimes, the amortization schedule includes additional fees such as:
- origination fees
- closing costs
- early payment penalties
- property tax
- mortgage insurance