Calculate monthly payments and see how each payment affects your loan over time
Extra amount applied to principal each payment
Amortization is the process of paying off a loan over time through regular payments. A portion of each payment goes toward interest costs, and the remaining amount is applied to your principal balance. Understanding this process helps you make informed decisions about your mortgage.
In the first years of your mortgage, most of your payment goes toward interest. For a 30-year loan at 4.5%, about 70% of your payment is interest in the first year.
As the loan matures, more of your payment goes toward principal. In the final years, nearly your entire payment reduces the principal balance.
Higher loan amounts mean larger payments and more interest over time
Even a 0.5% rate difference can save or cost tens of thousands over 30 years
Shorter terms have higher payments but much less total interest
Additional principal payments can shave years off your mortgage
Bi-weekly payments make an extra monthly payment each year
Lower rates or shorter terms can significantly reduce interest
| Frequency | Payments/Year | Annual Payment | Impact |
|---|---|---|---|
| Monthly | 12 | 12 × monthly payment | Standard |
| Bi-Weekly | 26 (13 months) | 13 × monthly payment | Pay off 4-5 years faster |
| Accelerated Bi-Weekly | 26 | Equivalent to monthly × 13.5 | Pay off even faster |
Even small additional principal payments can significantly reduce your total interest and shorten your loan term. Use our calculator to see the impact of extra payments.
By paying half your monthly payment every two weeks, you'll make one extra full payment each year without feeling the pinch in your monthly budget.
If interest rates drop significantly, refinancing to a lower rate can save thousands. Consider the closing costs vs. long-term savings.
A 15-year mortgage typically has a lower interest rate than a 30-year loan, and you'll pay much less interest overall, though monthly payments are higher.
Use the "Extra Payment" field to see how much you can save by paying more than the minimum. Even an extra $50 per month on a $300,000 loan at 4.5% could save you over $20,000 in interest and pay off your loan 3 years earlier!