Start with the theory behind the mathematics of amortization.

In completing an amortization schedule for a conventional mortgage, it is important to recognize the following:

The monthly payments are

in amount.

The monthly

payment is calculated by multiplying the mortgage's interest rate by the loan's outstanding balance.

The amount used to repay the loan's principal is calculated as the difference between the monthly payment amount and the monthly interest

amount. It is

over the life of the loan.

The ending balance for a particular month is calculated by subtracting the month's

payment from the month's beginning balance.

Therefore, as the loan is repaid, the amount of interest owed

I $,$ and the amount of principal repaid by each payment

The term

refers to the dollar value of a home in excess of the amount owed on it$.$ For example, a home that is worth, or

has a market value of$,$ $$200,000$ currently has a $$165,000$ mortgage loan against it$.$ The house's owner currently has

of equity in his or

her home. Further, when the market value of the home is greater than the loan on it$,$ the homeowner's equity is

$,$ but in market

conditions in which the homeowner owes more on the home than the house is worth, then the homeowner will have

equity. This is also

referred to as being

in the value of the home.

As the loan is repaid, the homeowner's equity

$.$ The second source of homeowner's equity is

the appreciation in the market value of the home.

the depreciation in the market value of the home.