See exactly how every payment breaks down, how much interest you'll pay over time, and how extra payments can dramatically accelerate your payoff.
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Amortization is the process of paying off a debt through regular, scheduled payments over time. Each payment covers the interest accrued since the last payment, with the remainder reducing your principal. Early payments are mostly interest; later payments are mostly principal.
Extra payments reduce your principal balance faster, which means less interest accrues each period. On a 30-year mortgage, even an extra $200/month can save tens of thousands in interest and shave years off your loan — with no penalty on most standard loans.
The longer you carry a loan, the more you pay in interest. Because interest is front-loaded in amortized loans, accelerating payoff — especially in the first few years — has a disproportionately large impact on your total cost. Refinancing to a lower rate also compounds these savings.