Every monthly mortgage payment chips away at both interest and principal. Amortization is that gradual process of paying down the loan balance over a set schedule.

Early payments are mostly interest. As the balance shrinks, a larger share of each payment reduces principal. A standard 30-year fixed mortgage follows a predictable amortization schedule that can be calculated the day the loan closes. Borrowers who make extra principal payments shorten the term and cut total interest.

Lenders provide amortization tables that show the exact split for every payment. Adjustable-rate mortgages and interest-only loans alter the pattern. Understanding amortization helps buyers compare loan offers and see the long-term cost of extending a term versus paying extra each month.

• Gradual repayment of principal and interest
• Front-loaded interest in standard schedules
• Can be accelerated with extra payments
• Displayed in detailed amortization tables