An excellent use of an amortization table is to compare a 15 year term with a 30 year term. The $150,000 loan 30 year monthly payment would be increased $351 a month, making your monthly payment $1,348, but your interest paid would be more than cut in half, dropping from $209,263 to $92,683. This table would show that it would be worthwhile to take on a 15 year term if you could stand to pay $351 more a month. If you are unable to change to a 15 year term, adding an extra payment yearly can decrease the total amount of interest paid by just under $50,000. If you are planning to make extra payments be sure to consult your lender about prepayment fees to ensure that you will not be penalized for repaying your loan early.

The figures generated by amortization tables are estimates and you should defer to your lender for concrete, guaranteed information. Amortization table estimates do not factor in late or missed payments, which, if occurring frequently, could significantly impact your repayment schedule. Also, amortization tables may not process fractions of a penny in the same fashion as your lender. The purpose of an amortization table is to give you a clearer picture of how certain terms and components of your loan will affect you on a long term basis and should be used as an educational tool. These tables are not practical for borrowers with adjustable rates, as rates could change significantly over the life of your loan.

An amortization table usually works as follows: Your loan amount is $150,000. your interest rate is 7%, and your term is 30 years. The table will show you that your monthly payment will be $997. It may also tell you that your monthly interest is $581, your interest at the end of the first year will be $9,584, and that by the time your loan is repaid you will have paid $209,263. Other tables will even show you the amount of principal you are paying versus the amount of interest. In the first month with this loan you would pay $122 of your monthly payment to principal but the rest of the $997 towards interest. By the end of the loan, $992 would be paid to the principal while only $5 would be towards interest.

If you are looking into obtaining a loan, you have probably figured out that the more information you have, the better. An amortization table can give you detailed information about your future monthly payments and interest payments through out your repayment period. Fill out our free short form to contact up to four lenders about your new loan or use our amortization calculator to get an estimate on your monthly payments.