Fixed-Rate Mortgages

A fixed-rate, Ohio mortgage is the simplest and the most common of all Ohio home mortgage products. During the past few years, fixed-rate Ohio mortgages have risen because of the historical low mortgage interest rates. With lower interest rates, payments of fixed-rate mortgages are more affordable, and therefore the borrower is able to qualify for a larger mortgage loan. The only difference among fixed-rate mortgages is the length of the mortgage term. The term is the amount of time it takes to pay off the loan. Fixed-rate Ohio mortgages have two distinct features: * The interest rate and payments must be fixed over the term of the mortgage. * The mortgage must be paid off completely at the end of its term.

Ohio Amortization

A fully amortized Ohio loan is a mortgage that is paid off completely by the end of its term. To amortize is simply to decrease the principal balance on the mortgage by a monthly payment of principal and interest calculated to pay off the Ohio mortgage at a fixed period of time.

An Ohio amortization schedule can be produced for any Ohio mortgage, laying out the payments over the life of the mortgage. There are several web sites available that can provide an Ohio amortization schedule; all you need to provide is the principal Ohio loan balance, interest rate, loan term, and starting month and year.

As a loan officer, it is important to know how an Ohio amortization schedule is calculated. Say the amortization is calculated for a $100,000 loan amount with a 7% fixed-rate mortgage. Using a Financial calculator or loan originator software program, we find that the monthly payment for this loan is $665.30.

Next, we need to find the monthly interest rate by dividing the annual rate by 12 (7% divided by 12 = 0.583%). Since this is an Ohio fixed-rate mortgage, these numbers will not change during the life of the loan.

To perform the Ohio amortization calculation for the first month, we take the loan amount and multiply it by the monthly interest rate ($100,000 X 0.583% » $583.33). Thus, $583.33 of the first month's payment goes to pay the interest.

Subtracting this amount from the payment reveals the portion that goes toward payment of the principal ($665.30 -- $583.33 = $81.97). We now subtract this amount from the original Ohio loan amount to find how much principal remains at the end of the first month ($100,000 - $81.97 = $99,918.03).

Key Note: An Ohio amortization schedule is provided to every borrower. It is included in the loan documents.

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