Are Mortgage Loans Amortized?

March 8, 2019

Put simply, yes. Mortgage loans are actually one of the most common kinds of amortized loans that exist on the market today.

When it comes time for you to decide that you would like to buy your own house, there are many details that need to be taken into consideration. For one thing, if you decide to use a mortgage, it is important that you consider your options.

An important detail to know is whether mortgages are amortized. Luckily, MaxCash is here to explain a bit more about amortization and how it does or does not apply to mortgage loans.

What is Amortization?

Before we go into whether mortgage loans are amortized, let’s first discuss what amortization is. Amortization is simply the process of spreading out the repayment of a loan into several fixed payments over a set period of time.

With amortization, you will be paying the exact same amount of money each and every month. A percentage of your payments will go toward the principle and the percentage that goes toward the interest will gradually shift over time.

Mortgage Loans and Amortization

The standard mortgage loan was actually created in 1934, by the Federal Housing Act, or FHA for short. This government act made it possible for millions of Americans to be able to afford home ownership by introducing what is now known as the 30-year fixed rate loan.

What this means is that loan payments will be the same each month. The thing that makes a mortgage loan special though is that it is self-amortizing.

This means that although you keep paying the same amount every month, over time more of that payment will be going toward the principle rather than the interest. The lower the amount of money you have left to pay, the less interest that can be charged to you.

How Mortgage Amortization Works

In order to get a fuller understanding of how amortization works, you should have a look at an amortization table. You could use a mortgage calculator with a full amortization table to see how both the interest and principal amount of the loan are affected over time.

To get a brief crash course on how an amortized mortgage works though, let’s look at an example.

Let’s say that you have taken out a mortgage for $150,000 with a fixed rate of 5% over a term of 30 years. The fixed monthly payment that you would be making on such a loan would be $805.23 for 360 months.

At first, your payments will go toward the interest. On your first mortgage loan payment, $625 in interest and $180.23 will go toward the principle of the loan. That being said, as you repay your mortgage, that ratio will shift toward you paying more on your principle instead of the interest that comes with it.

Other Kinds of Amortized Loans

In addition to mortgage loans being amortized, there are several other kinds of loans that are amortized as well. Other examples of amortized loans can include (but are not limited to):

  • Auto loans
  • Title loans
  • Various forms of personal loans

Loans That Are Not Amortized

That being said, although there are many kinds of loans that are amortized, there are quite a few that are not. Some of these unamortized loans include:

  • Interest only loans
  • Credit cards
  • Balloon loans

Find Your Best Mortgage Loan Deal with the Help of MaxCash!

If you have decided that a mortgage sounds like the thing for you, then look no further than the good folks at MaxCash to help you secure the best deal possible!

We help people across the nation every day get the mortgage loan they need to proudly call themselves homeowners. We work closely with only the best lenders out there in order to help individuals acquire a square deal.

To get a hold of us, there are a variety of ways to do so. Take a look:

  • Calling us on our toll-free number at (833) 207-9052
  • Emailing us at info@maxcash.com
  • Coming down to our physical office at 1270 E. Broadway Rd., Suite 208, Tempe, AZ 85282

DISCLAIMER:
The MaxCash website does not offer or provide loans, but rather, it offers a service. It should not be construed as a lending agent or broker. The site does not endorse any lenders and does not charge visitors any fees. The website owners do not evaluate potential lenders’ applications, nor do they approve or deny credit. The MaxCash website does gather applicants’ personal information and transmits it to lenders that are part of the site’s lending network. No one is required to make use of this website, nor are they under any obligation to begin contact with site operators or to attempt to secure a loan with any of the site’s lending partners. Transmission of your financial and personal information on the website in no way obligates lenders to offer you a loan or any other kind of credit product. Be aware that cash transfer times can vary, depending on the lender and the bank you use. It may be necessary to fax information under certain circumstances. All questions about loans, and any concerns you may have should be directed to your lender. These loans are intended as short-term financial solution to satisfy borrowers’ needs for immediate monetary relief. This is not intended to be part of a long-term financial plan for individuals. These services are not offered in all states. Potential borrows may undergo credit check if lenders choose to use any of the major credit reporting bureaus, including Equifax, Trans Union and Experian. They may also use other alternative sources to check credit ratings. Your request for a loan constitutes your agreement and acknowledgement that (A) your personal data may be shared with lenders and perhaps other third-party partners, and (B) lenders can acquire credit bureau reports that detail your credit history. Reports from major credit bureaus, such as Equifax, Experian and TransUnion may be obtained and used to evaluate your reliability as a borrower.

1Loan amounts by the lenders vary based on qualifications.

2Since we do not lend money directly we cannot offer you a solicitation for a loan. In all serviced states we WILL match you with a lender based on the information you provide on this website. We will not charge you for this service and our service is not available in all states. States that are serviced by this Web Site may change from time to time and without notice. Personal Unsecured Loans are not available in all states and all areas.

3Loans such as, Auto Title Loan companies typically do not have pre-payment penalties, but we cannot guarantee that every lender meets this standard. Small Business Loans typically do have pre-payment penalties and occasionally will use your car as collateral to secure the loan. Other types of loans may have pre-payment penalties as well.

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Loans such as Car Title Loans are expensive and you may have other ways to get funding that is less expensive. These types of loans are meant to provide you with short term financing to solve immediate cash needs and should not be considered a long-term solution. Residents of some states may not be eligible for a loan. Rejections for loans are not disclosed to our firm and you may want to contact the lender directly.

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Car Title Loan lenders are usually licensed by the State in which you reside. You should consult directly with these regulatory agencies to make sure your lender is licensed and in compliance. These agencies are there to protect you and we advise making sure any lender you receive money from is fully licensed.

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