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Amortization Engine

The amortization engine is the core of the loan simulator. It generates month-by-month breakdowns of principal, interest, insurance, and balance.

Monthly Schedule

For each loan, the amortizer calculates:

  • Beginning Balance: Outstanding principal at the start of the month
  • Scheduled Payment: Fixed or recalculated payment due
  • Interest Component: Based on daily rate × balance
  • Principal Component: Payment minus interest
  • PMI / MIP: Mortgage insurance for FHA/USDA if applicable
  • Ending Balance: Balance after applying principal
  • Date: Computed from the loan start and calendar logic

Example Output

| Month | Date       | Beginning Balance | Payment | Principal | Interest | PMI/MIP | Ending Balance |
|-------|------------|------------------:|--------:|----------:|---------:|--------:|----------------:|
| 1     | 2025-07-01 |          400,000  | 2,398.20|   398.20  | 2,000.00 |     0.00|      399,602.00 |

Compounding Conventions

By default, the amortizer uses 30E/360 (standard mortgage convention), but other methods like ACT/365 may be introduced later.

Extra Payments

You can simulate accelerated payoff by specifying:

  • --extra-payment 200
  • --extra-frequency monthly or biweekly

These extra principal contributions reduce the ending balance faster and shorten the loan term.

Recasting

Recasting reduces the monthly payment after a lump-sum principal injection.

mortgage amortize --recast-date 2027-01-01 --lump-sum 10000
  • Payment is recomputed over the remaining term
  • Interest savings are realized immediately

Refinancing

The engine can simulate a refi mid-stream:

mortgage amortize --refinance-date 2027-01-01 --new-rate 5.25 --new-term 300 --refi-fees 2500

This closes out the current loan and starts a new one with the updated parameters, optionally rolling closing costs into the balance.

PMI, MIP, USDA Fees

Depending on loan type:

  • FHA: 1.75% upfront MIP added to loan; 0.85% annual MIP paid monthly
  • USDA: 1.00% upfront guarantee fee + 0.35% annual fee
  • VA: 2.25% funding fee added to loan; no monthly PMI

These are automatically modeled by the Loan class at instantiation.

Visualization

To view your amortization curve:

mortgage plot --scenarios 400000 6.0 360 --scenarios 400000 5.25 360

This compares remaining balances over time across scenarios.

Output

Use --output schedule.csv to export the full amortization schedule to CSV for further analysis.

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