How Mortgage Amortization Works

Mortgage amortization is the schedule that shows how each payment is split between interest and principal. In early months, a larger portion goes toward interest. Over time, more goes toward principal as your balance declines. Understanding amortization helps you decide whether to prepay principal, refinance, or buy mortgage points.

This is why extra payments made early can save significant interest. Use our Amortization Calculator and Extra Payment Calculator to model scenarios and visualize interest savings.

Key Takeaways

• Same monthly payment, changing interest/principal mix.
• Longer terms reduce monthly payment but increase total interest.
• Extra payments reduce balance faster and can shorten loan term.

Common questions