Monthly payment, total interest & amortization schedule
| # | Payment | Principal | Interest | Balance |
|---|
Amortization is the process of spreading a loan into a series of fixed payments. Each payment includes both principal (reducing your debt) and interest (the cost of borrowing). In the early years, most of your payment goes to interest. Over time, the proportion shifts so that more goes toward principal.
Even small changes in interest rate can have a large impact on total cost. On a $300,000 30-year mortgage, the difference between 4% and 5% interest is over $60,000 in additional interest. Shopping for the best rate is one of the most impactful financial decisions you can make.
Make biweekly payments instead of monthly (equals one extra payment per year), round up your monthly payment, make one extra payment per year, or refinance when rates drop. Even small additional payments toward principal can save thousands and shorten your loan term significantly.