Mortgage Loan Amortization

Mortgage Amortization, by definition, is “referring to the process of paying off a debt over time through regular payments. A portion of each payment is for interest while the remaining amount is applied towards the principal balance”(Google). By making the repayments in either monthly payments or the sum of the total payments, people will decrease the amount that they owe, which will help people to save their money in the long run like what the author Glen Craig states “As the interest portion of your payment declines, the principal portion increases, and with it, the remaining term of the loan gets shorter,” as soon as people start paying the principal, the payment period will get shorter.

A mortgage is a big debt, and it is almost as big as a person’s home. Everyone wishes to shorten the term by prepaying as much of the loan as they can and as quickly as possible. Since the cumulative interest on mortgage loans makes people’s loan balance even bigger. Owning a house without any loan will helps house owner to save money more easily because house owner will not have to pay the monthly payments anymore.

The short-term mortgage loan and long-term mortgage loan will, eventually, make a huge difference to the house owner. The faster the balances that house owner gets to pay off, the more money they can save. For example, as the author Glen Craig has mentioned in this article, “paying off your loan in 20 years instead of 30 will save nearly $120,000 in payments (based on a $200,000 loan), freeing up money for investing or for what ever else you want to do,” $120,000 is a lot of money, and house owner could investing in some other projects. For example, buy another house in Pittsburgh or some other area with that 120,000 dollars and r...

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...For people who have 30 years mortgage, their amortization will remain stuck in slow motion. So it is better to pay off the mortgage as soon as possible.

Amortization basically means that your loan was set up in a way that will take a specific amount of time to repay it. As time passes, some of the payments will go to the interest, and some will go to the principal. Usually with the mortgage amortization, people pay more for the interest other than principal in the beginning of the year. Therefore, the faster people can start to pay off the principal, the faster the debt owner can pay off the balance.

Works Cited

CRAIG, GLEN. "What Is Mortgage Amortization and How Does It Work?"Free From Broke. N.p., n.d. Web. 25 May 2014.

"What Is Mortgage Loan Amortization - Google Search." What Is Mortgage Loan Amortization - Google Search. N.p., n.d. Web. 25 May 2014.