How to Calculate Mortgage Amortizations

A mortgage amortization schedule shows you how your payments are scheduled regarding principal and interest. It also lets you see how your mortgage is gradually reduced over the loan period by showing how much of your payment goes to interest and how much goes directly to the principal. As you pay off your mortgage and the balance you owe is reduced, more of your monthly payment goes toward paying off the principal.

Calculating your mortgage amortization may empower you to feel in charge of your finances because you will have a better idea of how beneficial it might be for you to make higher or more frequent payments on your mortgage. It also keeps you on track and looking forward to that wonderful day when you’ll own your home free and clear. Ultimately, an amortization schedule makes your mortgage payments seem more manageable and meaningful.

Use a Mortgage Amortization Calculator

How do you calculate monthly mortgage payments? What is the formula for calculating amortization? If you ponder these questions and want to figure out how to calculate mortgage amortization in the easiest, most efficient way possible, use a mortgage amortization calculator.

The Bret Whissel Amortization Calculator is a popular choice, but many different calculators are available. Typically, an amortization calculator shows the reduction of your mortgage debt. It displays a simple breakdown of how much you pay in interest, how much you pay on the principal of the loan each month and how much the loan balance is each month for the duration of the mortgage.

If you opt for the Bret Whissel mortgage amortization calculator, you can enter information in six different sections: the principal, payments per year, annual interest rate, number of regular payments, balloon payment and payment amount. The principal simply refers to the amount that you borrowed to purchase the home; it’s the amount that will be paid in full at the conclusion of the amortization period. Enter the annual percentage rate, which is often abbreviated as only APR, in the annual interest rate field. It is how much interest you pay without other fees. The payments-per-year field should simply state how many payments you need to make on the mortgage every year. That figure is 12 per year if you make monthly payments. The number of regular payments will reveal precisely how many regular payments will be made throughout the life of the loan.

For example, if you have a 30-year mortgage that’s paid monthly, you would enter 360 in the field. The payment amount is the figure that you are to pay each month or otherwise each payment period. If you have a balloon payment option with your mortgage, enter that lump sum in the balloon payment field. Then, to get the value you wish to determine with the Bret Whissel calculator, leave one of the categories blank or enter zero for that category. The categories you choose from are the principal, payments per year, annual interest rate, number of regular payments, balloon payment and payment amount. Fill in all the rest of the categories. Next, click the calculator option to update the page and get the value you need.

Nearly any data field on the form can be determined with the calculator. You may also check the option to show the amortization schedule. Keep in mind that the calculator probably won’t be effective at handling situations where you’ve made a series of extra payments or have accumulated late fees.

Try an Excel Spreadsheet Tool

Another option to calculate mortgage amortizations is to use an Excel spreadsheet through the tool on the APB Pole Barns website. It also offers a loan-amortization calculator, yet the one on this website creates an Excel spreadsheet that you can either print or save on your tablet or computer. You only need to enter the data for your loan and click the option to calculate the information. You can then instantly download your customized Excel file.

This tool helps you track the overall amount of interest you will pay along with your loan balance. The spreadsheet has room for you to record the payment date and, if paying via traditional check, the check number used. Be sure to update the document so that you can track mortgage amortization each month.

Create Your Own Spreadsheet

You don’t have to rely on any premade chart or tool to have your own spreadsheet that you can use as you calculate your mortgage amortization. Instead, feel free to do it yourself if you know how to make a fairly basic spreadsheet. You may opt to use Google Sheets, Apple Numbers, Microsoft Excel or some other software that enables you to create and edit spreadsheets. Most spreadsheet programs offer a basic, free loan template that you can use to build the mortgage amortization spreadsheet. Most spreadsheet programs offer a calculation tool called the payment or PMT function that will help you figure out the amounts you need to place in specific columns.

Don’t worry if this task proves to be challenging. If you have a difficult time creating your spreadsheet, look on sites like Fiver or Etsy to find people who are happy to make a customized mortgage amortization spreadsheet for you at a reasonable price.

Using an Amortization Table

Having an amortization table will allow you to appreciate the benefits of an amortization schedule. Since the amount you pay in interest goes down over time as you pay off your mortgage, the amortization table allows you to see how much more you are paying on the actual balance of the loan over time. Therefore, the same amount you pay each month near the start of the mortgage can suddenly seem larger near the end of the loan when you are paying so much directly to the principal.

Also, an amortization table is a great option for those who like to see the numbers and data in an organized way. While a calculator is great for figuring out necessary information quickly, an amortization table provides much more detailed information arranged in an easy-to-understand manner. The amortization table will show what your balance is at the start of each month. It will also indicate how much you pay on the mortgage every month. The table will cover how much of the mortgage principal you’re paying off with each payment. It also shows what the overall mortgage balance will be at the end of the month.

You need to know the mortgage interest rate for an accurate amortization table. Unlike using some of the amortization calculators, you need to work from the mortgage rate, not just the APR. Your mortgage holder will use the mortgage interest rate divided by 12 for the number of months in the year to determine both your monthly payment and your monthly interest charges. Once you have the mortgage rate, divide it by 12. Next, multiply your loan balance by the mortgage rate divided by 12. That will reveal the interest that is charged each month.

Next, minus the interest that’s charged from the mortgage payment each month. That will leave you with the amount you pay on the principal every month. Next, subtract the principal you paid from your current mortgage balance. That will leave you with the new balance on your account. You can take those steps for each month you want to place on the amortization table.

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About the Author

Robin Raven is an experienced journalist and author. She has a BFA in writing from the School of Visual Arts and loves to write about personal finance. She has contributed to USAToday.com, The Huffington Post, The Nest, Grok Nation, and many other publications.