When a person obtains a mortgage and the broker goes over all of the documentation,most of the time the only thing the mortgagee really understands is the amount of money he/she will be paying each month. There is very little information given in terms of how much of the payment will actually be going to interest and how much to the principal. This is why using an amortization calculator independently to determine this is a good idea. You can buy one of these calculators that can be carried around can be purchased at office supply stores but one can also use an online amortization calculator. If a person is just looking for a single use then the online applications will work just fine. However,for people like mortgage brokers or real estate investors,a hand held amortization calculator is a much better choice.
Looking at loan docs and trying to figure out the repayment details can be nearly impossible without an amortization calculator. This is because there is a specific formula that is used to figure in the amount of interest on a loan,the repayment term and the principal that will be paid off over the specified number of years. For example,a mortgage that is amortized over a 30 year period will be much different than one that is amortized over 15 years. In addition,there are other factors such as whether the mortgage rate is adjustable or fixed that can play a role in the way the mortgage is amortized. Also,when a mortgage balloons in a certain number of years,payments will be amortized over a given period of time such as the above mentioned 30 years but nothing will be paid toward the principal. In this case the amortization schedule may not indicate the fact that the only thing being paid is interest and at the end the entire amount of the mortgage will be due and payable.