In a previous blog post, we discussed tips for scheduling payments for a personal loan on time. Most importantly, a payment schedule ensures that all parties understand the terms of the loan, avoiding unnecessary confusion. In particular, an amortization calculator helps confirm for the lender and borrower the terms of interest and principal payments, so the borrower can follow the payment schedule.
Now, we will delve deeper into some of the specific uses and benefits of amortization schedules, especially for homeowners. Typically amortization schedules can be used for loans with clear payoff dates at the time they're taken out, such as mortgages or car loans, explains Investopia.
Amortization schedules can be incredibly useful for borrowers, but why?
The schedules are helpful because they allow users to view interest and principal values for different refinancing options. For example, a borrower may need to determine whether he should obtain a 30 year or 15 year mortgage, Mortgage News Daily reports. With an amortization schedule, the borrow can plug in the mortgage amount and calculate the schedules for both durations.
If the 15 year mortgage is not within your realm of economic possibility, there are still ways you can accelerate your mortgage payments. One method is to take the 30 year mortgage, but increase your average monthly principal. This way, you will pay your mortgage off earlier and with less interest.
Determining your payments through an amortization calculator is only possible through professional-grade software, which allows lenders to determine interest rates, as well as principals, installment amounts, payment and compounding frequencies. Best-in-class software provides borrowers with a clear schedule for their loan payments, saving them time and money.