Chris Pedison - Mid America Mortgage, Inc.

Mid America Mortgage, Inc.

  • About Us
  • Blog
  • Resources
    • First Time Home Seller Tips
    • First Time Home Buyer Tips
    • What to Expect at Closing
    • Home Appraisal
    • Home Inspection
    • Loan Checklist
    • Loan Process
    • Loan Programs
    • Mortgage Glossary
    • Mortgage FAQ
  • Pre-Qualify
  • Reviews
    • Our Google Reviews
    • My Zillow Reviews
    • Yelp Reviews
    • Facebook Reviews
    • Social Survey
    • Video Testimonials
  • Contact
You are here: Home / Mortgage / An Overview of Amortization: It Plays A Role In Monthly Mortgage Payments

An Overview of Amortization: It Plays A Role In Monthly Mortgage Payments

March 3, 2021 by Chris Pedison

An Overview of Amortization: It Plays A Role In Monthly Mortgage PaymentsEven though this may sound like a fancy word, amortization is simply a long word for a straightforward topic. Furthermore, it plays a significant role in the determination of monthly mortgage payments.

Before taking out a home loan, homeowners need to understand how their payment schedule works and what this means for the future of the home loan.

Amortization refers to the way monthly payments are calculated to make sure that homeowners pay the same amount every month throughout the life of the loan. Even if homeowners do not stay in the house for the life of the loan, amortization will still play a significant role in the amount of money they receive if they decide to sell the home.

Amortization Plays A Major Role In Calculating Monthly Payments

First, amortization plays a major role in calculating monthly payments because it ensures that homeowners pay the same amount of money over the life of the loan. Even though there is interest on the home loan, and inflation will play a role in the value of money during the life of the loan, the monthly payment is going to stay the same. This is particularly beneficial to homeowners who are still working and believe that their income is going to go up during the life of a 15 year or 30 year mortgage. Even if their income goes up, and even if inflation plays a role, their monthly mortgage payments will still stay the same thanks to amortization.

Amortization Divides Interest And Principal In Monthly Payments

On the other hand, amortization also plays a role in calculating interest versus principal in monthly mortgage payments. At the beginning of the loan, the majority of each monthly payment goes toward interest on the loan. At the end of the loan, the majority of each monthly payment goes toward principal. This also means that if homeowners decide to sell their home at some point during the loan, they might not get as much money as they think because most of their monthly payments have gone toward interest and haven’t built up any equity. This is another key factor homeowners should keep in mind when it comes to amortization.

Filed Under: Mortgage Tagged With: Amortization, Mortgage, Mortgage Payment

Chris Pedison

Contact Chris Pedison


Senior Loan Originator

Mobile (903) 215-3226
Toll Free 1-888-434-4349

NMLS #272747

PRE-QUALIFY NOW

CLICK HERE from your phone
to download my app!
MAM

Connect with Me

Get A Rate Quote!

  • This field is for validation purposes and should be left unchanged.

Recent Articles

  • The Three Essential Habits That Successful Home Buyers Must Embrace
  • Looking at Home Mortgage Refinancing in 2021
  • VA vs FHA vs USDA What’s the Difference?
  • Suffering from Credit Problems? Understanding Mortgage Lenders and How They Assess Your Credit
Equal Housing
Licensed by the N.J. Department of Banking and Insurance
AZ BK#0918586

Our Location


Mid America Mortgage, Inc.
14900 Landmark Blvd
Suite 600
Dallas, TX 75254

Copyright © 2021 · Powered by MySMARTblog