What Is Mortgage Amortization?

What is mortgage amortization?

"Amortization" is a word for the way a mortgage is repaid: Your monthly mortgage payment stays the same from month to month (not counting taxes and insurance), but the percentage of that payment going to the principal versus the interest changes over time.

In the first years, most of each payment goes toward interest and only a little pays off the debt. That ratio gradually changes, and eventually it flips. In the later years of the mortgage, most of the payment pays off principal, and a smaller proportion goes toward interest. That's amortization in a nutshell.

Amortization is more than a concept. It's a tool for understanding how much you still owe in any given month, how much interest you've paid so far and how much interest you'll pay over the life of the loan.

NerdWallet's mortgage amortization calculator gives you this information and more.

What is a mortgage amortization calculator for?

Using a mortgage amortization calculator, you can:

• Find out how much total interest you would pay over the life of a loan.

• Determine the remaining loan balance in any given month.

• Figure out how much of each month's payment goes toward principal (debt reduction) and how much goes toward interest.

• Compare the total cost of a 30-year loan versus a mortgage with a shorter term, such as 15 years.