Amortization
Amortization is the process by which a mortgage loan is paid down over time through scheduled monthly payments that include both principal and interest.
In the early years of a mortgage, a larger portion of each payment goes toward interest. As the loan matures, the balance shifts and more of each payment goes toward reducing the principal. This schedule is predetermined at closing based on your loan term and interest rate.
Amortization is not a trick or a hidden cost — it is simply the math behind how fixed-rate loans are structured. Every borrower follows this same payment curve.
Why This Matters: Understanding amortization helps you see how equity builds over time and why making extra principal payments early in the loan can save thousands in interest over the life of the mortgage.
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