ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How to Pay Off Your Home Early Using an Amortization Schedule

Updated on January 1, 2016

A Sample Amortization Schedule

You will want to call your bank to receive the one specific to your loan.
You will want to call your bank to receive the one specific to your loan. | Source

Your House Belongs to the Bank Until it is Paid For

Did you know that you don’t actually own your house until it is completely paid off? That means that if you lose your job or if something else happens that prevents you from making your payments that the bank can foreclose on your home and force you to move. Even if it is in the last year of your mortgage and you have paid thousands of dollars to them in the past. Miss a few payments and you can be evicted from your own home and your home sold to someone else. I know this because I’ve purchased foreclosure property and some of the stories can be tragic. It happens every day in the US.

Today I am going to show you a way to pay off your mortgage quicker to help you close that timeline of vulnerability. I’ve used this method before and it does work. It may sound a little overwhelming to you at first but once you get into the groove, you’ll love seeing just how quickly you can get to the end of the payments and how much interest you aren’t paying to the mortgage company. It’s money in your pocket when the loan is finally paid off.

An example of a page in an Amortization Schedule.
An example of a page in an Amortization Schedule. | Source

Mortgage Loans are Different

Mortgage loans do not work the same way that other loans do like personal loans, credit cards or auto loans. They are structured differently. What you are looking at right now is an example of what you need to get from your mortgage company. Pick up the phone, call them and ask them for the amortization schedule for your loan. Every mortgage company that I have ever dealt with has provided this paperwork at no charge, but you have to ask for it to get it.

The example that you are looking at is for the first year of a $125,000, 30 year mortgage at a 4% fixed interest rate. Your mortgage is obviously going to be different but the numbers will be similar in their differences between the principal and interest gaps. The total principle and interest payment for this combination is $597.00 a month. Not a bad house payment and it is cheaper than what a lot of people are currently paying in rent.

Column 1- The amount of interest you pay with each payment.
Column 1- The amount of interest you pay with each payment. | Source
This is the column that shows the principle that is paid with each payment.
This is the column that shows the principle that is paid with each payment. | Source

The first column, the one that has the yellow header, is the amount of interest that your payment includes for each of the 360 planned payments that you would make if you followed the status quo “make the house payment every month” schedule that the mortgage company would like for you to make.

The second column, headed in green, is the principle. Principle is the amount that you are actually applying toward the house. In this example, the amount that is being applied to our original $125,000 loan balance is a measly $180.00. When you follow the status quo payment schedule and make your first house payment, you have just purchased approximately 3 sheets of drywall in your house, the other $417.00 is going directly into the lender’s pocket.

But, there’s a way that you can dig into your mortgage further and faster.

Cross those payments off because they are DONE.
Cross those payments off because they are DONE. | Source

How to Use the Schedule for Your Benefit

Using our example, let’s pretend that we are making our first payment on this mortgage. We have to pay the $597.00 to cover the first month’s principle and interest, there’s no way to get around that. If we apply another $544.00 to that first house payment, it changes the mortgage ballgame.

By paying the extra $544.00 and telling the mortgage company that you are applying the extra money in your payment to the principle, you have just made FOUR house payments instead of one. You mark January, February and March off of your payment schedule. Your next payment’s principle and interest are based on April, 2016’s line in the amortization schedule.

You have just paid 4 house payments without having to actually pay 4 house payments. Or, you purchased all of the drywall that is hanging in your living room with your first house payment.

January's payment is technically April's payment.  You are digging into that mortgage!
January's payment is technically April's payment. You are digging into that mortgage! | Source

Your Next Payments and What Happens to the Interest?

Your next payment will be sent to the mortgage company on January 1st but you are now looking at April on your schedule. You are still paying the regular monthly payment of $597.00, but this month you have $551.00 more that you can apply toward your mortgage. You make out the check, include the note to the mortgage company that the $551.00 goes toward your principle and even though it is only your second mortgage payment, you are currently 9 months into your mortgage. Your next payment is due February 1st 2016, but according to your amortization schedule, you are making the payment for August, 2016. If you continue on this path you will have your first year under your belt with your 4th house payment.

What happened to the interest? You won’t have to pay that interest. You essentially just saved yourself $1,246.00 in interest with your very first payment. You won’t see that money today but for every month that you make the additional principle payments and knock those months off of your mortgage, instead of paying the mortgage company at the end, you are putting that money in your pocket.

Where's the Interest?

It's in YOUR pocket at the end of the loan, not the bank's.
It's in YOUR pocket at the end of the loan, not the bank's. | Source

The Last Few Months of an Amortization Schedule

You can see the amounts have completely flip flopped at the end of the loan.
You can see the amounts have completely flip flopped at the end of the loan. | Source

Are currently paying on a mortgage?

See results

Start at the Beginning!

Now this is extremely important. This method works the best if you start at the beginning of your mortgage. As time goes on, the principle amount increases and the interest amount decreases until, as you can see with this example of the last few months of our example loan, they have completely flip flopped. Now the principle amount in each payment is much larger than the interest amount. You’ll see exactly what I’m talking about when you receive your amortization schedule that you ask for from your lender.

This is how banks make their money on mortgages. The majority of the interest is paid within the first half of the loan. This is also why people make very little profit on their house, sometimes even losing money if the property value fell, when they sell within the first 5 years of purchase. There is no equity, you don’t own enough “sheets of drywall” in that home if you follow the status quo payment schedule and decide to sell too quickly. The status quo banking system is designed to benefit the mortgage company, not you, the purchaser. In my opinion that is the main reason why mortgages are set up this way. Learn the system and it puts the control of your money back into your hands where it belongs to begin with.

Call your mortgage company now and request a copy of your amortization schedule. Look at your numbers with principle compared to interest. Your home is your biggest investment and it should belong to you, not the bank.

How to Pay Off Your House Early With an Amortization Schedule


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)