What’s a Mortgage Amortization Schedule, and How Does It Work?

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What is a mortgage amortization schedule?

Amortization is the process of paying off a loan by making regular payments.

A mortgage amortization schedule shows how much you’ll pay each month toward your mortgage. The schedule breaks down each payment by showing how much of the payment goes toward your principal (the amount you borrow) and toward interest (the fee a lender charges for loaning you money). 

The amortization schedule also tracks how much you have left to pay on your principal after each monthly payment is complete.

The schedule will show that you pay the same amount each month, but the amount you’ll pay toward the principal and interest changes monthly. More of your payment goes toward interest at the beginning, and by the end, most of your payment covers the principal. 

This logic may seem weird, but think of it like this, assuming a hypothetical interest rate of 3.5%: 3.5% of $200,000 is less than 3.5% of $150,000, so it makes sense that you’re paying less in interest once you’ve paid down more of your principal.

A mortgage amortization schedule can help you keep track of how much you have left to pay on your mortgage and understand how much you’re paying toward interest. Tracking these numbers can help you make decisions, such as whether you want to refinance for a lower rate or make extra payments toward your principal. Or you just may want to stay informed about what you’re paying.

If you haven’t gotten a mortgage yet, sample mortgage amortization schedules can help you decide which term length you want to get. For instance, a schedule will reveal that a 30-year mortgage results in lower monthly payments than a 15-year mortgage, but also that you’ll pay a lot more in interest over the years.

You’ll have other monthly house-related expenses, like property taxes and insurance, but these aren’t factored into your amortization schedule, because they aren’t debt-related — you aren’t trying to pay off mortgage insurance the same way you’re trying to pay off a mortgage.

30-year mortgage amortization schedule example

Let’s look at an amortization schedule example for a 30-year mortgage. A 30-year fixed-rate mortgage requires you to pay off your loan for 30 years, or 360 months, and you’ll pay the same rate the entire time.

In this example, you have a $200,000 mortgage at a 3.5% interest rate. We’ve rounded each number to the nearest dollar. Here is your mortgage amortization schedule for the first year: 

As you can see, you’ll pay $898 each month, with most of that money going toward interest at first. You’ll gradually start putting more toward the principal and less toward interest each month.

Now let’s look at your payment schedule for the last year of your 30-year mortgage:

Almost 30 years later, you’re still paying $898 per month, but most of your payment is going toward your principal.

15-year mortgage amortization schedule example

Let’s see how an amortization schedule breaks down for a 15-year fixed-rate mortgage. In this example, you’re borrowing $200,000 for 15 years, at a 3.25% interest rate. We’ve chosen a lower rate than we did for the 30-year example, because shorter terms usually come with lower interest rates.

Again, we’ve rounded each payment to the nearest dollar.

You’ll see quite a few differences with a 15-year mortgage than with a 30-year mortgage. First, monthly payments are several hundred dollars higher. Second, more money is going toward your principal than your interest right off the bat, because you have to put more toward the principal to pay off your mortgage in half the time.

You’ll also notice that your outstanding balance dwindles much faster with a 15-year mortgage.

Here is the amortization schedule for the final year of your hypothetical 15-year mortgage:

Just like with a 30-year mortgage, almost all of your monthly payment is going toward the principal by the end of your term.

You do have the option to pay extra toward your mortgage, which will alter your amortization schedule.

Paying extra can be a good way to save money in the long run, because the money will go toward your principal, not the interest. However, ask your lender if it charges any prepayment fees before you schedule an extra payment. You may decide paying the fee is worth it, but you don’t want any surprises. 

There are couple ways to pay extra. You can pay a little more every month, or you can make one or more larger payments toward your mortgage. 

For example, maybe you get a $5,000 bonus every May for your annual work anniversary, and you put that $5,000 straight toward your principal. Here’s how that extra payment would affect your mortgage amortization schedule for a 30-year mortgage: 

Before your $5,000 payment, principal payments and interest payments only shift by around $1 per month. But the $5,000 payment alters both by $16 from May to June, and by the end of the year, you’ve paid off an extra $5,000 of your principal.

If you schedule a $5,000 payment every May, you’ll pay off your mortgage over 12 years earlier, and you’ll pay tens of thousands of dollars less in interest.

How to create a mortgage amortization schedule

You can ask your lender for an amortization schedule, but not all lenders offer them. They’ll likely say they can give you a monthly payment schedule, which won’t break down what goes toward the principal and interest each month.

The simplest way to see a personalized mortgage amortization schedule is to use an online calculator on websites like Bankrate or NerdWallet. Online calculators let you play around with how your schedule would change if you were to, say, get a 20-year term instead of a 30-year term, or pay a little extra every month.

You can also make your own amortization schedule on Microsoft Excel or Google Sheets. You don’t have to do all the math yourself — there are plenty of explainers online about what formulas to use to create an amortization table relatively quickly.

Either way, be prepared to enter the amount you borrow for your mortgage, the interest rate, and the term length to get accurate numbers. Hopefully, seeing the details of your payments will help you have a better handle on your money and make any big decisions about your mortgage.

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