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Home Mortgages

Home Mortgages. I want to explain some things about the home mortgage Excel file you have. First off, the whole output is often called the amortization schedule. Amortization is a word that was made up by folks who amortize - bank accounting types – good folk, make great neighbors.

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Home Mortgages

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  1. Home Mortgages

  2. I want to explain some things about the home mortgage Excel file you have. First off, the whole output is often called the amortization schedule. Amortization is a word that was made up by folks who amortize - bank accounting types – good folk, make great neighbors. The monthly mortgage column was found by putting in the first cell under the column heading the formula =pmt(.01, 360, -100000) Now go over to the Amount owed at the beginning column. The beginning of time period 1 is really time 0, or the present. On a loan at the present, the minute you take the loan you owe all that money. Other values in this column are merely what you owe at the end of the previous period. In other words, what you owe at the beginning of period 2 is what you owe at the end of period 1.

  3. The interest charge column takes the amount owed at the beginning of the period and multiplies by the monthly interest rate. The principal paid in period column is simply monthly mortgage minus the interest charged in the period. The Amount owed at end of period before payment column is just the amount owed at the beginning of the period plus the interest charge during the period. The last column shows what you still owe at the end of the period.

  4. Major point Note the monthly mortgage is the same each moth. But that payment each month is broken up into an interest payment and a contribution to principal that are not the same each month. (The principal here is the money borrowed.) The interest starts out high and becomes low with the principal the opposite. REMEMBER, you owe a lot early and thus they charge you high interest (even with low interest rate) early. Plus they let you move in before you can fully pay.

  5. Assignment #7 Create an amortization schedule for a 100,000 loan 30 years fixed at 6% (compounded monthly) Only print the 1st and last page (do a print preview to find out the last page.)

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