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Disclaimer: Estimates are meant to be illustrative and used for reference purposes only. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided. No legal, tax, financial or accounting advice provided.

Mortgage amortization refers to the process of paying off your home loan over a defined period through regular, fixed payments. Each monthly payment you make covers both interest and principal, gradually reducing your outstanding loan balance. At the beginning, your payments are mostly interest, but over time, an increasingly larger portion goes toward the principal until the loan is fully repaid.

Amortization typically applies to installment loans, especially mortgages, car loans, and personal loans. These loans involve regular, scheduled payments that cover interest and principal, gradually paying off the borrowed amount completely by the end of the loan term. Revolving debt, such as credit card balances, is generally not amortized due to fluctuating balances and payment amounts.

An amortization schedule is a detailed table that outlines each payment on your loan throughout its entire term. It clearly breaks down each monthly payment into interest and principal components, showing how your outstanding balance decreases over time. Reviewing this schedule helps you understand exactly where your money goes each month and how quickly your debt is shrinking.

Typically, there’s no penalty for paying extra principal on most residential mortgages, especially if your loan is from a conforming lender. Making additional payments toward principal can help you pay off your mortgage faster, saving substantial interest over the life of the loan. However, always review your loan terms or consult your lender directly to confirm that no prepayment penalties apply.

Under current U.S. tax law (post the 2017 Tax Cuts and Jobs Act), mortgage interest is deductible for loans used to buy, build, or substantially improve your primary or secondary residence, but only up to a principal amount of $750,000 for married couples filing jointly ($375,000 if married filing separately). This limit applies to loans originated after December 15, 2017. Loans made prior to this date may have higher deduction limits. Principal payments themselves are not tax deductible, as they’re simply repayments of the borrowed amount. Always consult a tax professional for guidance specific to your situation.

To accurately use the mortgage amortization calculator, you’ll need the following inputs: the loan amount (principal borrowed), the interest rate (annual percentage), and the loan term in years. Optionally, you can also include any additional monthly payments you’re planning to make toward principal. With these inputs, the calculator will clearly outline your monthly payment breakdown, interest costs, and provide a complete amortization schedule.