Amortization Calculator

Amortization is the process of paying off a loan through regular payments over time. Each payment covers both interest and principal, with the ratio changing over time. Early payments are mostly interest; later payments are mostly principal. Example: $200k mortgage at 6.5% for 30 years - First payment: $1,014 interest + $251 principal. Final payment: $7 interest + $1,258 principal.

Strategies: Make extra principal payments, pay bi-weekly (26 half-payments = 13 full payments per year), round up payments, or make one extra payment annually. Even $100/month extra can cut years off your loan. Example: $200k at 6.5% for 30 years - Extra $200/month saves $92k in interest and pays off 8 years early. Always specify "apply to principal."

Interest is calculated on the remaining balance. Early on, balance is high, so interest is high. As you pay down principal, less interest accrues. It's not a scam - it's how percentages work. Example: $200k at 6.5% - First month interest = $200k x 6.5% / 12 = $1,083. After 10 years, balance is $172k, so monthly interest = $931. Same rate, lower balance = lower interest.

Not always. Refinancing restarts the clock - you go back to paying mostly interest. Only refinance if: New rate is 0.75-1% lower, you plan to stay 5+ years, closing costs are reasonable. If 10 years into a 30-year mortgage, consider refinancing to 15 or 20 years, not another 30. Calculate break-even point: Closing costs / monthly savings = months to break even.