Definition
The amortization schedule is your roadmap showing exactly how each payment splits between principal and interest across the entire loan. It shows that early payments barely touch principal, but later payments mostly reduce principal. It's essential for understanding your loan payoff and planning extra payments.
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The amortization schedule is typically provided at closing and can also be accessed online through the lender's portal. Each row represents one payment and shows how much interest and principal are paid that month and the updated loan balance. This schedule is essential for understanding loan payoff and planning extra principal payments.
Pro Tip
Review your amortization schedule to identify when principal payoff accelerates; consider making extra principal payments in early years for maximum impact.
Example
A 30-year mortgage amortization schedule shows payment 1 with $1,500 interest and $299 principal, and payment 360 with $8.37 interest and $1,790.63 principal.