Loan Amortization and Why You Should Care

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Amortization isn’t an exciting topic, but it’s essential for every homeowner to understand how this works. Amortization is an important concept that displays how you pay off a house over time.

Look at an Amortization Calculator

I want to invite you to Google an amortization calculator and just play around with it – especially if you are thinking about getting into a house and you haven’t done this before. An amortization calculator can help you see the bigger picture by showing with a graph and numbers how you will pay down that mortgage over time.

You’ll know what your first payment will look like as far as principal reduction, and how much of your mortgage you will pay off over 10 or 20 years.

Why You Need to Know About Amortization

Having this information is powerful because it gives you, as the potential home buyer, more power to jump into the real estate market with confidence because you know how the numbers are going to play out over time.

This isn’t just for someone who is going to pay off a loan over 30 years. Let’s say that you are someone who is planning to hold onto a home for 5 years. The amortization calculator will show exactly where you are going to be at the end of the 5-year period and how much you are going to pay down on principal reduction.

What it doesn’t do is show you how much the home will go up in value. This is a great tool for you to see specifically how much you are paying off each month when you are making payments on a fully amortized mortgage.

If you have questions about this concept or need help looking at the numbers, I am always just a phone call away. Contact me any time for help with buying or selling a home in Temecula. You can call, text or email me at (951) 473-0390 or [email protected]