The Early Years Of a Mortgage Are Interest-Loaded

For homeowners, a mortgage amortization schedule's most important trait is how it renders mortgage payments interest-heavy at the start. There is very little principal that's goes back to the bank each month.

If you've ever looked at your mortgage statement after a few years and thought, "I haven't paid this thing down a bit!", it's because of amortization. Amortization schedules are decidedly "bank-friendly".

At today's rates, it would take 20 years to reduce the 30-year, fixed-rate mortgage's amount owed by half.

Having said that, amortization schedules can benefit to homeowners, too. Because mortgage interest is often tax-deductible, the early, interest-heavy years of a loan can provide larger tax benefits than the loan's later years.

Furthermore, an amortization schedule can be accelerated with "extra" mortgage payments. Years can be shaved off a loan's life with just some basic planning.