Paying off a loan with equal payments that gradually shift from mostly interest to mostly principal.
Early payments are interest-heavy: on a fresh 30-year mortgage, well over half of each payment is interest. The split flips over time, which is why extra payments early save the most.
Example: A $336,000 loan at 6.5% for 30 years costs $2,124/month; the first payment includes $1,820 of interest.
FAQ
What is Amortization in simple terms?
Early payments are interest-heavy: on a fresh 30-year mortgage, well over half of each payment is interest. The split flips over time, which is why extra payments early save the most.