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Principal vs interest in loan payment

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You just got a mortgage to buy your first house from ABH bank. Do you think you are going to contribute more to the reduction of your unpaid balance at the end of each month in the early years of your payments or toward the end of the life of the mortgage? Explain why or why not. You can justify your answer with an example.

(Note: Do not comment on your current economic situation. Only consider the mathematics in this problem.)

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A discussion is supported by an excel amortization schedule for a visual on this.

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Although the monthly mortgage payment amount is the same each month, the amount of the payment that is interest versus principal changes as your loan ...

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Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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