Real Estate Term:Amortization schedule

An amortization schedule is a table detailing each periodic payment on a loan (typically a mortgage), as generated by an amortization calculator. Amortization schedules are calculated so that each periodic payment for the entirety of the loan is equal, making the repayment process somewhat simpler under amortization than with other models.

While every payment is applied towards both the interest and the principal of the loan, the exact amount applied to principal each time (with the remainder going to interest) varies. An amortization schedule reveals the specific dollar amount put towards interest, as well as the specific amount put towards principal, with each payment. Initially, a large portion of each payment is devoted to interest. As the loan matures, larger portions go towards paying down the principal.

Amortization schedules run in chronological order. The first payment is assumed to take place one full payment period after the loan was taken out, not on the first day of the loan. The last payment completely pays off the remainder of the loan. Often, the last payment will be a slightly different amount than all earlier payments.

In addition to breaking down each payment into interest and principal portions, an amortization schedule also reveals interest-paid-to-date, principal-paid-to-date, and the remaining principal balance on each payment date.

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