By committing to a mortgage loan, the borrower is entering into a financial agreement with a lender to pay back the mortgage money, with interest, over a set period of time. The borrower’s monthly mortgage payment may change over time depending on the type of loan (Fixed, ARM, Interest Only, etc.). However, for this article, we will address the typical 30 year fixed Principal and Interest loan program. So…
Once the loan closes, over the next 360 months, the borrower will pay the same amount in Principal + Interest (P + I) each payment. As each month passes and the monthly P+I payment is made, the make up of the P + I will change. As each payment that is made, a certain amount of interest is taken out to pay the lender back for the opportunity to borrow the money, and the remaining balance is applied to the principal balance; the principles reduces each month.
The monthly Principal and Interest for a $200,000.00 loan at 4% anual interest rate with a term of 30 years is $954.83. I have attached an amortization schedule for the first 12 month period of a 30 year loan as an example. An amortization chart runs chronologically through your series of payments until you get to the final payment. The loan amortization table below shows your monthly payment divided into two portions. One portion is put towards interest (interest paid), while the other portion goes towards principal (principal paid)..
| MONTH | P+I | interest paid: | principal paid: | remaining balance: |
| 1 | 954.83 | $666.67 | $288.16 | $199,711.84 |
| 2 | 954.83 | $665.71 | $289.12 | $199,422.72 |
| 3 | 954.83 | $664.74 | $290.09 | $199,132.63 |
| 4 | 954.83 | $663.78 | $291.05 | $198,841.58 |
| 5 | 954.83 | $662.81 | $292.02 | $198,549.56 |
| 6 | 954.83 | $661.83 | $293.00 | $198,256.56 |
| 7 | 954.83 | $660.86 | $293.97 | $197,962.59 |
| 8 | 954.83 | $659.88 | $294.95 | $197,667.64 |
| 9 | 954.83 | $658.89 | $295.94 | $197,371.70 |
| 10 | 954.83 | $657.91 | $296.92 | $197,074.78 |
| 11 | 954.83 | $656.92 | $297.91 | $196,776.87 |
| 12 | 954.83 | $655.92 | $298.91 | $196,477.96 |
| TOTAL | $7,935.92
|
$3,522.04
|
The chart can also be a useful tool to determine interest paid to date, principal paid to date, or remaining principal.
Another frequent use of amortization charts is to determine how extra payments toward principal can affect and accelerate the month of final payment of the loan, as well as reduce your total interest payments.
To run your own amortization schedule, calculate payments, the benefits of pre-payments and numerous other mortgage scenarios, go to our website and click on the mortgage calculator. http://www.paramountmortgage.com/Mortgage-Calculators
St. Louis MORTGAGE INTEREST RATES for May 16, 2012:
- · Conventional 30-Year Fixed 4.00%/ 4.195% APR
- · Conventional 15-Year Fixed 3.250%/ 3.390% APR
- · Conventional 5/1 ARM 2.375%/ 3.082% APR
- · FHA/VA 30 Year Fixed 3.750%/ 3.991% APR
- · Jumbo 5/1 ARM 2.875%/ 3.445% APR
- · Jumbo 15 yr Fixed 3.375%/ 3.630% APR
- · Jumbo 30 yr Fixed 4.750%/ 5.010% APR
*The above mortgage rates are based upon an 80% LTV, o/o single family with FICO scores of 720.
Paramount Mortgage is a locally owned Mortgage Banker celebrating our 41st year. Great rates and programs are secondary to what is most desired in a lender relationship: Integrity, Communication and Customer Satisfaction. Be to check out our website: www.paramountmortgage.com
For more information or if you have questions on mortgage rates you may contact me by phone at my direct line, (314) 372-4319, email at rfishel@paramountmortgage.com or you can visit our company website at http://www.paramountmortgage.com.
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