Mortgage Amortization, Explained
Amortization is the schedule that splits each payment between interest and principal. Understanding it shows you exactly where extra payments help most.
Why early payments are mostly interest
Each month, interest is charged on the remaining balance. Early on, the balance is large, so most of your fixed payment goes to interest and only a little to principal.
As the balance shrinks, the interest portion falls and more of each payment chips away at principal — which is why the balance curve drops slowly at first, then faster.
What extra payments do
Any extra you pay goes straight to principal, skipping all the future interest that principal would have generated. That's why even small extra payments early in the loan can save years and tens of thousands in interest.
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