Learn how mortgage amortization works, why your early payments are mostly interest, and how to use your amortization schedule to save money.
Your $400,000 mortgage at 6.25% costs $2,463/month. Where does that money go?
Month 1: $2,083 goes to interest, $380 goes to principal. Month 360: $15 goes to interest, $2,448 goes to principal.
This is amortization. Let me explain how it works.
Amortization is how your mortgage payment is divided between principal (paying down the loan balance) and interest (cost of borrowing).
Key fact: Your payment stays the same every month, but the split between principal and interest changes.
Early in the loan: Most of your payment is interest. Late in the loan: Most of your payment is principal.
View sample amortization schedule →
Example: $400,000 loan at 6.25% for 30 years
| Month | Payment | Principal | Interest | Remaining Balance | |-------|---------|-----------|----------|-------------------| | 1 | $2,463 | $380 | $2,083 | $399,620 | | 12 | $2,463 | $403 | $2,060 | $394,982 | | 60 | $2,463 | $469 | $1,994 | $372,459 | | 120 | $2,463 | $584 | $1,879 | $326,045 | | 180 | $2,463 | $724 | $1,739 | $267,914 | | 240 | $2,463 | $898 | $1,565 | $197,342 | | 300 | $2,463 | $1,114 | $1,349 | $113,174 | | 360 | $2,463 | $2,448 | $15 | $0 |
Notice: Your payment never changes ($2,463), but in month 1 only $380 goes to principal. By month 360, almost the entire payment ($2,448) is principal.
Broker's Tip: This is why refinancing to restart a 30-year loan (when you're already 10 years in) can cost you money long-term — you're resetting the amortization clock.
Interest is calculated on your remaining balance.
Month 1:
Month 120 (10 years in):
As your balance drops, less goes to interest and more goes to principal.
On a $400,000 loan at 6.25%:
You pay $1.22 in interest for every $1.00 you borrow. This is normal for 30-year mortgages.
Want to pay less interest? Refinance to a 15-year mortgage or make extra principal payments.
Your lender provides an amortization schedule when you close. It shows:
Why this matters:
Every dollar of extra principal saves you interest.
Example: You pay an extra $200/month toward principal.
Without extra payments:
With $200/month extra:
ROI on that $200/month: 327% over the life of the loan.
Use the extra payment calculator →
Broker's Tip: If you're planning to pay extra, ask your lender if there's a prepayment penalty (rare, but some loans have them). Also specify "apply to principal" when you make extra payments.
Be careful refinancing late in your loan.
Example:
If you refinance to a new 30-year loan:
Better option: Refinance to a 20-year loan (match your remaining term) or a 15-year loan (accelerate payoff).
Pay half your mortgage every 2 weeks instead of once a month.
How it works:
That extra payment per year goes entirely to principal.
Result:
Most lenders allow bi-weekly payments. Ask when you close.
Same loan amount ($400,000 at 6.25%):
30-year:
15-year (rate is usually 0.5% lower, so 5.75%):
15-year saves you $289,980 in interest but costs $852/month more.
Can you afford it? Use our 15 vs 30-year calculator.
Q: Can I change my amortization schedule after closing?
Not without refinancing. Your schedule is locked when you close. But you CAN make extra principal payments to pay off faster.
Q: Why does my lender send me a new amortization schedule after I make an extra payment?
Because your payoff date changed. Extra principal payments shorten your loan term.
Q: Does my amortization schedule include property taxes and insurance?
No. It only shows principal + interest. Taxes and insurance are separate (even if escrowed).
Q: Can I see my amortization schedule online?
Most lenders have online portals where you can view your schedule. Or use our amortization calculator to generate one.
Q: What if I refinance — do I get a new amortization schedule?
Yes. Your new lender provides a new schedule based on your new loan amount, rate, and term.
View your amortization schedule:
Use the amortization calculator →
Want to refinance and start a new schedule?
I'm a California licensed mortgage broker with 15+ years experience (DRE #01212512).
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Licensed mortgage broker with 15+ years of experience helping homeowners save money through refinancing. CA DRE #01212512.