Question

anmortization methods

Answer 1

There are different methods used to develop an amortization schedule. These include:

Straight line (linear)Declining balanceAnnuityBullet (all at once)Balloon (amortization payments and large end payment)Increasing balance (negative amortization)

Amortization schedules run in chronological order. The first payment is assumed to take place one full payment period after the loan was taken out, not on the first day (the origination date) of the loan. The last payment completely pays off the remainder of the loan. Often, the last payment will be a slightly different amount than all earlier payments.

In addition to breaking down each payment into interest and principal portions, an amortization schedule also indicates interestpaid to date, principal paid to date, and the remaining principal balance on each payment date.