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Loan amortization article

Amotization schedules can be demonstrated through the use of spreadsheet packages that contain mortgage amortization formulas that show you the results of ad-hoc “what if?” scenarios such as how overpayment affaects the relationship between interest and principal payment amounts. The difference between these and the fixed rate loan is that the rate, and therefore the payment, is fixed only for the first few years, and after that the rate varies based upon an underlying index. Let’s say you want to purchase a $100,000 home so the bank agrees to provide with a loan at a fixed interest rate of 5% for 15 years. Alternately partially loan amortization means that at the end of the set payment period, a large additional payment, called a balloon payment is then due.