📋 Amortization Schedule Calculator

Amortization = Paying off a loan through regular payments where each payment covers: 1. Interest on remaining balance 2. Principal reduction Early payments → mostly interest Later payments → mostly principal This is why extra early payments are so powerful!

M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1] P = Principal (loan amount) r = Monthly rate = Annual Rate ÷ 12 ÷ 100 n = Total months Example: $400,000 loan, 6.75%, 30 years r = 6.75 ÷ 12 ÷ 100 = 0.005625 n = 360 M = 400,000 × [0.005625 × 1.005625³⁶⁰] ÷ [1.005625³⁶⁰ − 1] M = $2,594.86 / month

Month 1: Interest = Balance × Monthly Rate = $400,000 × 0.5625% = $2,250.00 Principal = Monthly Payment − Interest = $2,594.86 − $2,250.00 = $344.86 New Balance= $400,000 − $344.86 = $399,655.14 Month 2: Interest = $399,655.14 × 0.5625% = $2,248.06 Principal = $2,594.86 − $2,248.06 = $346.80 New Balance= $399,655.14 − $346.80 = $399,308.34 ...and so on for 360 months

Extra $200/month on $400K at 6.75% (30yr): Normal: 360 payments, $534,150 total interest Extra: ~308 payments, ~$432,000 total interest Savings: ~$102,000 interest saved ~52 months (4.3 years) shorter! The earlier you make extra payments, the more you save because interest is calculated on remaining balance.

Year 1: ~93% of payment goes to interest Year 5: ~90% interest Year 10: ~84% interest Year 15: ~75% interest Year 20: ~61% interest Year 25: ~40% interest Year 30: ~4% interest (final months) This is why the first years of a mortgage feel like you're barely making a dent in the balance!