By admin | August 12, 2008
Negative amortization (NegAm), is a status of mortgage whereby the repayment amount for a given loan period is lower than the interest charged upon the mortgage loan resulting in the actual balance increasing. Negative mortgage amortization is also known as a Graduated Payment Mortgage (GPM), when the interest amount charged against a mortgage loan exceeds the amount that contributes towards decreasing the mortgage principal.
Features of Negative Mortgage Amortization
- The payment for a given period does not cover the interest charged for that loan period so the mortgage balance increases.
- Recast period - Usually a five year period.
- Recast principal - Up to a 25% increase of the amortized mortgage balance above the original mortgage amount.
- Negative mortgage amortization loans are advertised with artificial introductory interest rates or with the minimum monthly mortgage payment shown as a %age of the mortgage loan amount.
- Potential for “payment shock”. Negative amortization mortgage payments can jump erratically from one month to another, sometimes to disastrous effect for the borrower.
Differences Between Negative Amortization and Reverse Mortgages
Negative amortization mortgages show an increase in the principal in the early part of the mortgage term… hence negative amortization: the amount owed increases rather than decreases. Reverse mortgages occur when a borrower sells the equity in his/her property but retains permission to reside there. Repayments are not due until the owner moves from the property but the interest charged on the mortgage is put back onto the principal as no interest payments are made during the term of the mortgage loan.
Negative Amortization Mortgage Summary
You should be very familiar with how this type of mortgage amortization works before entering into it: it is extremely important to understand how negative amortization payments change when the amortization period begins. A well planned negative amortization mortgage schedule or table is a must.
By admin | August 10, 2008
A mortgage amortization calculator can help you to see the regular repayments you have to make against a mortgage loan based upon the mortgage amortization process.
Mortgage amortization calculators consider varying amounts of interest as well as the mortgage principal into each and every repayment, even though the total amount of each mortgage repayment is always the same.
Principal Benefits of a Mortgage Amortization Calculator
A mortgage amortization calculator can show you the total amount that goes towards the interest and the amount that actually goes towards amortizing the principal in each monthly (or bi-weekly) payment. A mortgage amortization schedule is a chart highlighting these amounts throughout the term of the mortgage loan in date order.
Calculating Mortgage Amortization: How Mortgage Amortization Calculators Calculate?
Mortgage amortization calculators use three main factors to calculate how your monthly or bi-weekly mortgage payments amortize your mortgage principal.
- The mortgage loan amount
- The rate of interest
- The number of amortization periods (i.e. the term of your mortgage agreement in years).
The basic formula used to calculate the mortgage amortization schedule, ergo the monthly payments is:
Balance of Mortgage Principal [(Annual Interest Rate (1 + Annual Interest Rate), ((1 + Annual Interest Rate) n – 1)]
This formula may reasonably seem to be quite confusing to non-mathematicians, so that’s why a mortgage amortization calculator or mortgage amortization schedule can be so useful. The formula above can provide the basis for mortgage amortization calculations: although variances can be found according to whether your mortgage rate is fixed or adjustable, mortgage amortization calculators will likely use this rule as a base.
Mortgage Amortization USA Amortization Calculator/Schedule
In the near future we will be publishing our own online mortgage amortization calculator for you to use free of charge. We also intend to publish free mortgage amortization excel schedules for you to download and use as and when you like!
By admin | August 9, 2008
After you have scanned the market for your mortgage loan you may find yourself in a state of confusion. You will probably have researched several different mortgage loans offered by a variety of lenders and may be unsure of what the real impact of signing the dotted line will be. You might be uncertain whether the type of deal or interest rate offered by the mortgage lender is the best fit for the term and of the mortgage you are looking for and your own personal financial circumstances. You might also be unsure about how the payment schedule (i.e. the mortgage amortization schedule) will work out over the term? Or you may feel just a little nervous in case you have not done all your homework. This is where a mortgage amortization spreadsheet can help.
What is a Mortgage Amortization Spreadsheet?
Mortgage amortization spreadsheets synonomous with mortgage amortization schedules. They are often based upon functions that calculate the repayments on a mortgage loan based upon regular and steady payments at a constant and steady rate of interest (i.e. a fixed mortgage interest rate).
Mortgage amortization spreadsheets can give you a raft of figures to look at so that you can properly compare mortgage rates and terms in order to pin down the best one for you. A mortgage amortization spreadsheet can help you to analyze the monthly principle as well as the interest repayments so that you can get a clear understanding of your monthly mortgage amortization schedule and its impact upon your monthly outgoings.
Principal Benefits of Mortgage Amortization Spreadsheets
Perhaps most useful for some people, mortgage amortization spreadsheets can help you to project “what if” scenarios. A sophistacted amortization spreadwill allow you to:
- Calculate the loan repayments as well as the interest on the loan itself
- See a summary of your mortgage loan including a list of principal and interest payments to the point where the mortgage is amortized
- Calculate the impact of extra or over payment in order to reduce the cost of the mortgage loan.
Taking the time and making a small effort to build an amortization schedule through a spreadsheet package can give you more control over your finances. Many websites offer free amortization spreadsheets. Carry out a Google search on the term download amortization spreadsheet and you should be able to find several sites that offer such a tool free of charge.
By admin | August 7, 2008
Mortgage amortization schedules are usually to be found in Spreadsheets, as found in such packages as Microsoft Excel. A mortgage amortization schedule is the detailed plotting of mortgage repayments in order to amortize the mortgage loan. As such, mortgage amotization spreadsheets can be thought of as mortgage amortization calculators.
Mortgage amortization schedules can help to show you the precise financial impact of your monthly mortgage repayments. For example, you should be aware that for every payment you make against your mortgage loan, the amount that goes towards decreasing (amortizing) the principal can vary significantly: some of your mortgage repayments go towards amortization with the rest covering interest applied against the principal.
At first, the lion’s share of the repayments you make are taken up by the interest charges. As time passes a larger percentage of the repayment amortizes the mortgage loan amount itself. Thus over time the loan is repaid: consequently the mortgage is amortized.
A mortgage amortization schedule can help to outline the exact amount that you pay towards the mortgage principal and the interest upon it each time you make a payment.
How do Mortgage Amortization Schedules Work?
A mortgage amortization schedule runs chronologically: that is to say the schedule runs in a “time forward” fashion, either from the present date to a future date or a future date to another more distant future date. The first payment in the amrtization schedule will generally be considered to be a full payment period after the mortgage loan has been activated. This period is of course different from the very 1st day that the loan is activated (which is known as the mortgage loan amortization date).
The last payment is assumed to be the one that repays the principal, i.e. pays of or amortizes the mortgage. Oftentimes the payment amount that amortizes the mortgage loan can be different than the other repayments.
Main Benefits of a Mortgage Amortization Schedule
Mortgage amortization schedules can:
- break down your repayments into principal and interest segments
- show you the interest payments made to date
- show you how much of the principal you have paid to date
- and the remainder of the balance of the principal for each payment date.
By admin | August 6, 2008
In short, mortgage amortization is the repaying of a loan that has been granted to someone for the purpose of buying a property. The repayment of the mortgage debt is carried out via regular instalments (usually monthly) over the course of a specified time period (usually twenty five years or above).
The Word “Amortization”
The word amortization itself is an interesting term. Amortization is the act of decreasing a an amount over a given time period. The “mort” part of amortization has its root in the latin and generally relates to death. In fact many words relating to death contain this latinate word: rigor mortis, mortuary, mortician, mortify… even mortgage. Consequently, we could suppose that amortization suggests a long time… such as until death!
Hopefully we would all amortize mortgages prior to passing away, however we can understand from this that mortgage amortization generally occurs over a long time period.
A Summary Explanation of the Term “Mortgage Amortization”
To summarize, mortgage amortization is the act of decreasing an amount borrowed for property or real estate acquisition whereby the settlement of the of such an amount occurs regularly over time. Amortization is the paying off of a financial debt over time.
By admin | August 5, 2008
We intend to publish news, views and reviews about mortgage amortization. We will answer questions such as: What is mortgage amortization?; What are mortgage amortization schedules?; and why should you know about mortgage amortization.
As we are a small team we may not be able to update Mortgage Amortization USA every day, but do try to check here as we will be updating weekly at the very least.
Bye for now,
The Mortgage Amortization USA team