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Personal Finances / Buying or Selling a Home

URL:  http://boards.fool.com/each-month-you-are-paying-interest-on-what-you-10884122.aspx

Subject:  Re: Amortization Date:  5/21/1999  1:56 PM
Author:  jedilevin Number:  3746 of 128075

Each Month you are paying interest on what you owe. So if you have a $100,000 loan outstanding at a 7% annual interest rate, the first month you'll pay 7%/12*100,000 in interest = $583.33 in interest. Your payment is $665.30. That leaves $82 that goes towards principal. The next month you still have a loan of $100,000 - $82 = $99,918 outstanding. You owe interest in the amount of 7%/12*99,918 = $582.86. And so on

So where does the total payment amount come from? As I mentioned before, that amount is $665.30. It's the number you get if you ask t