Amortization

The schedule by which a mortgage's principal and interest get paid down over the loan term.

A 30-year fixed mortgage amortizes over 360 monthly payments. Early payments are almost entirely interest; later payments are almost entirely principal. The 'amortization schedule' shows the breakdown month by month. Two implications: (1) the loan balance stays high for years even with on-time payments, and (2) refinancing or selling early loses most of the principal benefit. Interest-only and balloon loans defer or skip amortization entirely — common in hard money and bridge loans.