{"id":4382,"date":"2023-06-08T16:11:05","date_gmt":"2023-06-08T16:11:05","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/?post_type=chapter&p=4382"},"modified":"2025-08-28T03:16:08","modified_gmt":"2025-08-28T03:16:08","slug":"homeownership-learn-it-3","status":"web-only","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/chapter\/homeownership-learn-it-3\/","title":{"raw":"Homeownership: Learn It 3","rendered":"Homeownership: Learn It 3"},"content":{"raw":"

Reading and Interpreting Amortization Tables<\/h2>\r\n

An amortization table<\/strong> or amortization schedule is a table outlining the repayment of a loan, detailing how payments are divided into principal and interest over the loan\u2019s 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.\u00a0<\/p>\r\n

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.<\/p>\r\n

\r\n[caption id=\"attachment_4384\" align=\"alignnone\" width=\"1564\"]\"A Figure 1. An amortization table fir a $5,000, 5 year loan with an interest rate of 5%<\/span>[\/caption]\r\n<\/center>\r\n

 <\/p>\r\n

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<\/center>\r\n

 <\/p>\r\n

    \r\n\t
  1. What is the interest rate?<\/li>\r\n\t
  2. How much are the payments?<\/li>\r\n\t
  3. How much of payment [latex]175[\/latex] goes to principal?<\/li>\r\n\t
  4. How much of payment [latex]180[\/latex] goes to interest?<\/li>\r\n\t
  5. What\u2019s the remaining balance on the mortgage after payment [latex]170[\/latex]?<\/li>\r\n<\/ol>\r\n\r\n[reveal-answer q=\"160930\"]Show Solution[\/reveal-answer] [hidden-answer a=\"160930\"]\r\n\r\n
      \r\n\t
    1. Reading at the top of the table, we see the interest rate is [latex]5.61\\%[\/latex].<\/li>\r\n\t
    2. Reading from the top of the table or from the column labeled Payment, we see the payments are [latex]$953.44[\/latex] per month.<\/li>\r\n\t
    3. In the row for payment [latex]175[\/latex], we see that the amount that goes to principal is [latex]$400.44[\/latex].<\/li>\r\n\t
    4. In the row for payment [latex]180[\/latex], we see that the amount that goes to interest is [latex]$543.56[\/latex].<\/li>\r\n\t
    5. In the row for payment [latex]170[\/latex], we see the remaining balance is [latex]$119,873.35[\/latex].<\/li>\r\n<\/ol>\r\n\r\n[\/hidden-answer]<\/section>","rendered":"

      Reading and Interpreting Amortization Tables<\/h2>\n

      An amortization table<\/strong> or amortization schedule is a table outlining the repayment of a loan, detailing how payments are divided into principal and interest over the loan\u2019s 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.\u00a0<\/p>\n

      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.<\/p>\n

      \n
      \"A
      Figure 1. An amortization table fir a $5,000, 5 year loan with an interest rate of 5%<\/span><\/figcaption><\/figure>\n<\/div>\n

       <\/p>\n

      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.<\/p>\n
      \"A<\/div>\n

       <\/p>\n

        \n
      1. What is the interest rate?<\/li>\n
      2. How much are the payments?<\/li>\n
      3. How much of payment [latex]175[\/latex] goes to principal?<\/li>\n
      4. How much of payment [latex]180[\/latex] goes to interest?<\/li>\n
      5. What\u2019s the remaining balance on the mortgage after payment [latex]170[\/latex]?<\/li>\n<\/ol>\n