12-Month Amortization & Equity Tracker

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Form Insight: 12-Month Amortization & Equity Tracker

Purpose: This tool provides a granular, month-by-month look at the first year of a loan. It is designed to move the user’s focus away from the "Total Debt" and toward Monthly Equity Gain, showing how every single payment makes them slightly wealthier.

Why Use This Form?

The first year of a mortgage is often the most discouraging because the balance barely seems to move. This form uses "Transparency Math" to show the user that even if the balance only drops a little, the Principal portion is growing every month. It’s a tool for persistence and long-term financial planning.

1. Mastering the Formulas

Your form owners need to understand that this table is a "Declining Balance" calculation. Each row depends on the result of the row above it.

A. The Interest Portion (IPMT)

• The Goal: To calculate the "rent" paid to the bank for that specific month.
• The Formula: (Remaining Balance * Annual Rate) / 12
• The Logic: Because the balance drops every month, the interest owed also drops. In our example, the interest drops by roughly $2.00 every month.

B. The Principal Portion (PPMT)

• The Goal: To calculate the "equity" gained for that specific month.
• The Formula: Total Monthly Payment - Interest Portion
• The Logic: Since the total payment is fixed (via the PMT function), every dollar saved in interest is automatically "moved" into the principal column. This is the Wealth Snowball.

C. The Ending Balance

• The Goal: To show the new "Starting Point" for the next month.
• The Formula: Starting Balance - Principal Paid
• The Logic: We only subtract the Principal, never the interest. This reinforces the idea that interest is a cost, while principal is an asset.

2. Key Business Insights

This tracker provides three "Aha!" moments for the user:

1. The Interest Decline: Users can see that by Month 12, they are paying $22.46 less in interest per month than they were in Month 1.
2. Tax Readiness: By summing the "Interest" column for Months 1–12, the form owner can tell the user exactly what their mortgage interest tax deduction will be for the year.
3. Equity Milestone: The form highlights the Year 1 Total Equity. Seeing a number like $4,912 reminds the user that they didn't just "spend" $28k on housing; they "saved" nearly $5k of it.

3. Quick-Start Guide for Users

• Step 1: Enter the Loan Amount, Interest Rate, and Term.
• Step 2: The form generates the Fixed Payment ($2,398.20).
• Step 3: Review the 12-Month Table to see the interest-to-principal shift.
• Step 4: Check the Year 1 Summary to see your total debt reduction and interest expense.