Amortization: A Blessing in Disguise

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When you buy a home, amortization works in your favor to help you pay off your loan principal when making mortgage payments each month. If you were only ever to pay down interest, there would be no difference between renting and buying because the home would never truly becomes yours.

With an amortization schedule, you can chip away at your principal loan and eventually pay off your home.

Amortization in Action

For example, if you have a $500,000 mortgage loan, a portion of your payments is applied to the principal amount. Even if $500 of your mortgage goes toward the principal each month, it quickly adds up when you see you have paid down $100,000 of the principal loan in the first 10 years.

Instead of applying the whole mortgage payment to the interest you accrue, you have a chance to pay down your loan from the start. Without amortization, you may set out to save $100,000 yourself to pay into your house. That is hard to do! Amortization is a forced savings plan to pay off your home.

Amortization: Pay Off Your Home

As the mortgage loan goes on, the principal loan gets lower and lower. You can reach a point where you are ready to fully pay off your home. Then you can live in your home without a house payment. What a dream!

When you choose to rent, you never have the chance to own a home and live there rent-free. Buying a home takes a lot of preparation and responsibility, but it has a big payoff in the end.

  1. Your payments are set for the full 30-year loan period. There are no landlords to raise the rent unexpectedly.
  2. Amortization promotes paying off your mortgage loan on a set schedule.
  3. You never have to move out unexpectedly because the landlord wants to sell.
  4. You have complete control over your home, including remodeling, painting, and subletting.
  5. You can build onto your home or install a pool in the backyard.

Owning a home gives you the freedom to live however you want. And once your home is paid off with the help of amortization, you can enjoy your savings or invest in a second property.

Schedule an Appointment with Cael Thomas

Is it time to buy a house and experience these benefits? Meet with my team to discuss real estate in Temecula. Call, text, or email at (951) 473-0390 or [email protected].