Amortization
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
Amortization is the process of paying off a mortgage in equal monthly payments that gradually shift from mostly interest to mostly principal over the loan term.
What Amortization means
Each payment is split between interest owed and principal that reduces your balance. Early on, the lion's share goes to interest; by the final years almost all of it pays down principal. The schedule is fixed at closing for a fixed-rate loan.
Florida example
On a $350,000 Florida mortgage at 6.75% over 30 years, your first payment puts roughly $1,969 toward interest and only $301 toward principal. Fifteen years in, that flips. Paying a little extra principal early shortens the payoff dramatically.
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