Amortization schedule
An amortization schedule is the full payment-by-payment table for a loan. One row per payment, from the first to the last, each showing the interest portion, the principal portion, and the balance remaining.
It is the least glamorous document in lending and the most informative.
What it answers#
What will this loan actually cost? Sum the interest column. On a long fixed-rate mortgage that total is often a large fraction of the amount borrowed, and seeing it written down changes how people think about term length.
What will I owe on a given date? Read across to the balance column. This is the number that decides whether a sale in year six covers the debt.
When does the payment start doing real work? Find the row where the principal portion first exceeds the interest portion. On a thirty-year loan that crossover is later than almost anyone guesses.
How extra payments change it#
An amount applied to principal does not just reduce the balance. It deletes every future interest charge that would have accrued on that amount, and pulls the whole remaining schedule forward.
The effect is largest early and shrinks toward the end of the term, because what an extra payment buys is avoided interest over the remaining years, and there are fewer of those every month.
Why it matters in distressed property#
Equity is market value minus what is owed. Market value is estimated. What is owed is knowable exactly — it is a row in a table.
Two houses with the same purchase price and the same loan, one bought in 2011 and one in 2021, sit at completely different points on their schedules. When distress arrives, the first has room to sell and the second may not. Nothing about the properties differs. Only the row number does.
Where to get yours#
Servicers will produce one on request, and many make it available in the online account. It is worth asking for rather than relying on a generic calculator, because the servicer's version reflects the actual payment history — including any extra payments already made, which a fresh calculation will not know about.
If you generate one yourself, three inputs produce the whole table: the current balance, the interest rate, and the number of payments remaining. Not the original loan amount and not the original term, unless the loan has run exactly to schedule with no extra payments and no modification.