Question 1

What is an amortization schedule?

Accepted Answer

An amortization schedule is a table showing every monthly payment over the life of your loan, broken down into principal and interest. In the early years, most of your payment goes to interest. As the loan matures, an increasingly larger portion goes toward principal. This schedule helps you understand exactly where your money goes each month.

Question 2

Why is most of my early payment going to interest?

Accepted Answer

Interest is calculated on the remaining balance each month. Since the balance is highest at the start, your interest charges are highest too. For a $280,000 loan at 6.5%, your first payment is about $1,770 — but roughly $1,517 goes to interest and only $253 to principal. This ratio gradually flips over the life of the loan.

Question 3

How much can I save by making extra mortgage payments?

Accepted Answer

Extra payments go directly to principal, which reduces the interest charged in subsequent months and shortens your loan. On a $280,000 loan at 6.5% for 30 years, paying just $200 extra per month saves over $80,000 in interest and pays off the loan about 7 years early. Even small extra payments can have a significant impact.

Question 4

Is it better to make biweekly payments or extra monthly payments?

Accepted Answer

Both strategies accelerate payoff. Biweekly payments (half your monthly payment every two weeks) result in 13 full payments per year instead of 12, which is equivalent to one extra monthly payment per year. Extra monthly payments offer more flexibility since you can choose the amount and skip months if needed. The savings are similar for equivalent amounts.

Question 5

Should I make extra payments or refinance to a lower rate?

Accepted Answer

It depends on your current rate and available rates. If you can refinance to a rate 0.5-1% lower and plan to stay in the home long enough to recoup closing costs (typically 2-5 years), refinancing may save more. Extra payments are better when rates are similar or you want flexibility without closing costs. You can also combine both strategies for maximum savings.

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