Amortization

Amortization is the schedule that is used to determine your monthly payment for a loan. Mortgages are considered to be an amortized loan because you make a regular payment based on a schedule created when you are approved for the loan. You should be given an amortization schedule before you sign the documents to receive your loan. It will tell you exactly how much of each payment will go toward principle and how much will go toward interest. This can help you determine how long your mortgage should be for. A 30-year mortgage will cost you more in interest as opposed to a 15 year mortgage. Always ask your lender if there is any penalty for paying off your mortgage early. If not, do your best to pay ahead of that schedule if possible.