DAVID SLADE: Crunch the numbers before refinancing home or car Charleston Post Courier

04.09.11

You can crunch the numbers yourself using a wonderful tool with an unwieldy name: an amortization calculator. It's a free tool you can find online, and it will show you where every dollar of every payment goes during the term of a loan.

The great thing about these calculators is that you can try different scenarios. How would a 15-year or 20-year loan compare to a 30-year loan? Click, click, click.

How much would your current payments decline if you refinanced? How much interest could you save if you made extra payments? Click, click.

By the numbers

Amortization calculators make clear some important realities of long-term loans that aren't always obvious.

For example, you can see that with a 30-year home loan, even at today's rock-bottom interest rates, nearly 70 percent of your mortgage payments during the first five years goes to interest, and you accumulate little equity.

Finance the same loan amount with a 15-year term, and the payments increase, but most of your money goes toward equity in the very first year.

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