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Not everyone in this world is blessed with brains that can calculate huge amounts of money in mere seconds. Certainly, not everyone in this world is able to understand what mortgage amortization is all about.

Fortunately, that’s where we step in and explain more about mortgage amortization.

The first question: what do you mean by mortgage amortization?
Amortization is something you’ve probably studied back in college but you’ve forgotten along the way. Amortization is the term used for the payment (this is done usually on a monthly basis) of which part is meant to be deducted from the principal (the amount of loan or mortgage) while the rest covers the interest fees of the mortgage.

How do you calculate the monthly mortgage amortization payment?
Go way, way back to your college days and try to recall the answer to this question. Can’t? Well, that’s okay because you’ll be able to find lots of calculators online to help you compute this. There’s actually a mathematical formula for this but since we’ll run out of time and space if we try tackling that, too, I’ll leave that up to you to find out. Just look it up in an investment textbook and you’ll be fine.

Can all mortgages be paid by amortization?

The answer is no. This depends on the agreement you have with your mortgage company. Some borrowers simply choose to pay the capital in a straight line method then worry about the interest afterwards or do it the other way around.

Are all monthly mortgage amortization payments equal?

Again, no. And again, this depends on the agreement between you and the mortgage company. Some prefer the payments to be equal since it’s easier to compute and you need not worry if the other party is getting the better of you. But there are also some who prefer the monthly mortgage amortization payments to vary, preferably proportional to their salary increases.

Which is better, equal monthly amortization payments or varied?
The answer depends on a case-to-case-basis. Some prefer the payments to vary, however, as it gives them the option to pay off the loan in a shorter time if possible.

What is negative mortgage amortization and when does it occur?
Negative mortgage amortization occurs when your payment for a particular period is insufficient to cover everything, including interest charges. What happens then is that interest charges will be added to the total amount of the loan (the principal).

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