Mortgage Amortization by Kevin Martini

Mortgage Amortization is the gradual reduction of debt over a period of time…for a 30-year fixed mortgage, the given period of time is 360 months. With a fixed rate mortgage term, your mortgage payment remains constant however distribution of principal and interest is different every month.  In the beginning of your loan a disproportioned amount of your fixed payment goes towards interest and later in the loan it is inverted hence, more principal is retired. 

Raleigh, NC Mortgage Strategists Kevin Martini shares how to make a 30-year mortgage a 20-year in the 55th episode of the Martini Mortgage Podcast which is available on all streaming services.  Fresh episode of the Martini Mortgage Podcast are released every Tuesday.  

Mortgage Amortization

When getting a mortgage it is very important to have an understanding of amortization. With a 30-year fixed mortgage, a large portion of your payment will go to interest. This not a bad thing, it is what it is. Over the passage of time the interest portion will be reduced and the principal reduction will accelerate. Below is an example of a monthly amortization schedule for a 30-year fixed mortgage with a beginning balance of $300,000 at a rate of 5% for the first 12-months (NOTE: this is for illustration purposes ONLY):

30-Year Mortgage Overview

Kevin Martini Strategy To Pay Your Mortgage Off Faster

As a primer, the following is for illustration and the actual numbers may vary depending on many factors to include your rate, your balance, remaining term and more. If you have specific questions about your personal situation and would like to have a confidential complimentary conversation with Kevin Martini, the Senior Mortgage Strategist and Branch Manager of the Martini Mortgage Group at Benchmark Mortgage simply call (919) 238-4934.

How to pay off a 30-year mortgage in 20 years…

If you pay 25% more every payment, then you will be able to make a 360 month mortgage a 240 month mortgage. So using the example mention before (e.g. $300,000 30-year mortgage at a rate of 5%) your required payment would be 1,610 a month for principal and interest. If you took that $1,610 and multiplied it by 1.25 you would get $2,012.50…that means you would be making an extra payment of 402.50 every month and if you that extra amount is paid towards principal you would retire your 30-year mortgage in 20-years and as an added bonus you would save over $100,000 of interest.

Kevin Martini | NMLS ID 143962 | Senior Mortgage Strategist & Branch Manager | Martini Mortgage Group at Benchmark Mortgage | Ark-La-Tex Financial Services, LLC NMLS ID 2143 | 223 S West Street, Suite 900 Raleigh, NC 27603 | (919) 238-4934 | | | Equal Housing Opportunity