Amortization Schedules – Always Keep Your Eyes Open
First Published: ADawnJournal.com December 10, 2009
On taking out a loan, it is not uncommon to get a momentary buzz of excitement on seeing the temporary balance of your bank account, showing as it does a few extra digits above and beyond the usual. It is perfectly common in such a situation to forget the small details, such as the fact that all that money needs to be paid back over time and that, generally, that money will pretty much all be accounted for in the very near future. These details come back to mind very quickly, though, in most cases, as we set about the arduous task of paying back the money we have borrowed. This is something we have to do in accordance with a schedule, and deviation from that schedule is likely to see us hit with a penalty.
A copy of your payment schedule will be one of the documents given to you on finalising your mortgage. It will tell you what you have to pay and when you have to pay it, any payments that are above normal and any that are below. Sticking to the schedule is your way of knowing that you are doing your bit under the mortgage agreement and should see you avoid any fees for non-payment being added to your account. Having a payment schedule should also put to the back of your mind any ideas about taking the money and spending it unwisely. The figures can make very sobering reading.
With a normal bank loan, taken out to pay for consumer goods, you will generally come to the end of your term while you are not much older than you are today. Looking at a mortgage payment schedule reminds you that you are locked into paying a certain amount of money for a certain length of time – and that this can add up to an awful lot of money and seem like an awful lot of time. It adds seriousness to a situation that is quite serious enough already. In short, if you borrow to pay for a house you are making a large commitment. Seeing that commitment outlined in black and white is the final proof that you’re making a step you cannot easily take back.
A payment schedule will often detail how much of your monthly mortgage payment is going towards paying down the balance of your loan, and how much is paying off interest. It is worth getting a breakdown of these figures, because there are numerous deals available which allow you to cut down how much interest you pay every month, and allow you to save money overall. It is worth shopping around for the best deals, and having your current mortgage payment schedule to hand may well enable you to research where you might get a better deal. Some deals have special terms and conditions written into them which allow you to renegotiate your deal after a certain period of time – if you feel as though your principal owing is not reduced every month, you can check around to see what other offers you might get.