A mortgage amortization schedule breaks down how each payment is applied over the life of a loan, showing how much goes toward interest and how much reduces the principal balance.
What Is Mortgage Amortization?
Mortgage amortization is the process of repaying a loan through scheduled payments. Each payment is divided between interest and principal.
Why Early Payments Go Mostly Toward Interest
Interest is calculated on the outstanding loan balance. Because the balance is highest at the beginning of the loan, early payments include more interest.
Fixed-Rate vs. Adjustable-Rate Mortgages
Fixed-Rate Mortgages
Fixed-rate mortgages have consistent payments and a predictable amortization schedule.
Adjustable-Rate Mortgages
Adjustable-rate mortgages may change over time, which can affect monthly payments and amortization.
What an Amortization Schedule Shows
An amortization schedule outlines payment dates, interest paid, principal paid, and remaining balance.
Example of Mortgage Amortization
A $200,000 loan at 5% over 30 years has an initial monthly payment of about $1,074, with most of the first payment applied to interest.
The Impact of Extra Payments
Making extra payments toward principal can reduce total interest and shorten the loan term.
How to Create an Amortization Schedule
Online calculators allow borrowers to input loan details and view amortization scenarios.
Why Understanding Amortization Matters
Understanding amortization helps borrowers plan, build equity, and make informed mortgage decisions.
A mortgage amortization schedule offers transparency into how a loan works and how financial decisions affect long-term costs.
If you want help reviewing your mortgage amortization schedule, contact our team for personalized guidance.