Amortization Calculators Key Terms

Familiarize yourself with amortization calculators key terms for a well-rounded knowledge of the tool

An amortization calculator is an essential tool used to determine monthly loan payment amounts, to refinance a mortgage loan and to compare interest rates. Regardless of the duration of your fixed rate loan, an amortization calculator is an important tool to get a clear picture of your perspective monthly payments.

Whether you are a financial professional or would like to determine how much of a monthly mortgage payment you can afford, learn these amortization calculators key terms to better understand and use this essential tool.

 

Amortization

Amortization is paying off the principal and interest of a debt, usually in the form of a loan, in scheduled payments.
Try: Learn more about amortization at HJVentures.com.

Loan principal

The loan principal is the complete amount of a loan without interest. An amortization schedule shows how much of a monthly payment goes toward the loan principal and how much goes toward interest.
Try: InvestorWords.com offers more extensive information on loan principals.

Refinancing

Refinancing is the reconfiguring of a home loan at a better interest rate to decrease the monthly payment or alter the loan duration. The initial mortgage contract is replaced with a new mortgage with a better interest rate. In loan refinancing, an amortization schedule is created with a new interest rate and loan duration factored in to determine the new monthly payment.
Try: MortgageLoan.com offers in-depth information on the benefits of refinancing a mortgage loan.

Fixed rate loan

A fixed rate loan is a loan that has an interest rate that remains the same throughout the duration of the loan. An amortization schedule uses the fixed interest rate with other loan factors to determine the monthly payment.
Try: Kiplinger.com offers background information on fixed rate loans and explains the advantages and disadvantages of fixed rate loans.

Amortization schedule

An amortization schedule is chart or table that illustrates the payment details of an installment loan. Monthly payment amount, the amount of payment that goes toward the principal and the interest and the duration of loan are presented.
Try: AllBusiness.com offers more information on amortization schedules with example amortization schedules.

Bond amortization calculator

A bond amortization calculator is a tool used to determine how well a bond will mature during a certain period of time.
Try: SmartMoney.com offers additional information on bond amortization calculators and how to effectively use a bond calculator.

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