What Is an Amortization Schedule?
An amortization schedule breaks down every loan payment into its principal and interest components. It shows your remaining balance after each payment, revealing exactly how your debt decreases over time.
How Amortization Works
In the early years, most of your payment goes to interest. Over time, the interest portion shrinks and the principal portion grows. On a $200,000 loan at 6% for 30 years, your first payment is $1,199, with $1,000 going to interest and only $199 to principal.
Benefits of Understanding Amortization
Knowing your amortization schedule helps you decide whether to make extra payments, when to refinance, and how much equity you're building. It reveals the true cost of extending loan terms and the value of paying down principal faster.