What is Amortization?
The process of paying off a mortgage over time. Early payments are mostly interest; later payments are mostly principal reduction.
Amortization is the process of paying off a mortgage through regular payments over time. Each payment includes principal (reducing your balance) and interest. Early in the loan, most of your payment goes to interest; over time, more goes to principal. An amortization schedule shows how each payment is split and your remaining balance throughout the loan term.