Understanding Your Amortization Schedule
An amortization schedule shows how your loan is paid off over time. Each payment is split between principal (reducing the loan balance) and interest (cost to the lender). In the early years, most of your payment goes to interest. Over time, larger portions go to principal.
This schedule demonstrates why refinancing to a shorter term can save significant interest, and why paying extra principal early in the loan can dramatically reduce total interest paid.
How Amortization Works
Your monthly payment stays the same throughout the loan, but the split between principal and interest changes. Early payments are mostly interest because the balance is high. As the balance decreases, interest charges drop, and more of each payment reduces principal.
The remaining balance shown in the schedule decreases each year as you pay down the loan. By the final year, you're paying mostly principal with minimal interest.
Using This Schedule to Your Advantage
Review this schedule to understand where you are in your loan payoff. Making extra principal payments early in the loan can save thousands in interest. For example, adding $100 to your payment each month can cut years off your mortgage and reduce total interest significantly.
If you're considering refinancing, use this schedule to compare remaining balance and interest. A refinance might make sense if you can secure a lower rate and recoup closing costs through monthly savings before the end of the term.