Homeownership: Learn It 3

Reading and Interpreting Amortization Tables

An amortization table or amortization schedule is a table outlining the repayment of a loan, detailing how payments are divided into principal and interest over the loan’s term. The schedule shows equal periodic payments and breaks down the specific allocation toward the interest, the reduction of the principal, and the remaining balance after each payment. 

Mortgage payments usually stay consistent in amount, but over time, the portion that goes toward interest decreases while the amount that reduces the principal grows. This is a typical aspect of how an amortizing loan works.

A spreadsheet labeled as amortization schedule calculator. The sheet calculates the repayment for the loan amount of $5,000.00 for an interest rate of 8 percent annually and the monthly payment is $101.38. The factors include calculations such as month, payment, principal, interest, total, and interest and balance.An amortization table fir a $5,000, 5 year loan with an interest rate of 5%

 

Below a portion of an amortization table for a [latex]30[/latex]-year, [latex]$165,900[/latex] mortgage is given. Use that table to answer the following questions.

A spreadsheet labeled as amortization schedule calculator. The sheet calculates the repayment for the loan amount of $165,900.00 for an interest rate of 5.61 percent annually and the monthly payment is $953.44 over 30 years. The factors include calculations such as month, payment, principal, interest, total, and interest and balance.

 

  1. What is the interest rate?
  2. How much are the payments?
  3. How much of payment [latex]175[/latex] goes to principal?
  4. How much of payment [latex]180[/latex] goes to interest?
  5. What’s the remaining balance on the mortgage after payment [latex]170[/latex]?