# How to Read an Amortization Table

## How Does An Amortization Table Work and How Does It Relate To Mortgages

This content is for those students seeking more information on math and finance. Some of you might be interested in becoming a loan officer or a home mortgage lender when you grow up. In order to do that, you need to understand the basics, including how an amortization table works.

## The Basics

An amortization table represents a series of loan payments that are spread out over a specified period of time. You should remember that your fixed payments each month might be a little different, but the amount you are paying back is still the same.

Image courtesy of Elevate Home Mortgage

## What does My Payment Go To Each Month?

You are generally paying the interest first then the principal. In the beginning, up to 90% of your payment goes to the interest. Your payments will go toward the principal after a while. Be patient.

Sometimes you need to see a few examples to fully understand the way a table like this works.

A balance of \$20,000 has a payment of \$377 for the first month. \$83 is for the interest. \$294 is for the principal. The end balance is for \$19,705. Keep in mind that this is for a loan period of 60 payments.

Go online. You can find a great example at The Balance. Click on the “how amortization works” tab, and you will find the table.

## How Do You Get the Calculations?

You use an amortization calculator. You can see for yourself how many payments you are going to have. Some of you might want to get your loan paid down faster. You just need to pay a little extra each month. It is doable if you can afford the additional payments.

You can create your own spreadsheets. That way you can do the math yourself. There are spreadsheets you can compare online to make sure you did it correctly.

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What Can Get Amoratized?

1) Auto loans

2) Home loans and personal loans

What Does Not Get Amoratized?

1) Credit cards

2) Interest-only loans

3) Balloon loans

Whether you are choosing to learn an amoratization table works because you plan on going into the lending field, or are a homeowner trying to plan out your mortgage payments, taking on this learning is a worthwhile endeavor. It can seem pretty hard to understand at first because of all of the technical language, but this information is important and helpful whatever the road is you want to take.

How to Read an Amortization Table
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