A monthly mortgage payment usually has up to four parts, often called PITI.

Principal and interest

Principal pays down what you borrowed. Interest is the cost of borrowing. Your combined principal and interest payment stays the same on a fixed-rate loan, but the mix changes every month.

Why early payments feel like they barely move the balance

Interest is charged on what you still owe, so early on most of each payment goes to interest. On a 30-year loan at around 6.75%, the first payments are well over 80% interest. Over time the balance shrinks and more of each payment goes to principal. This schedule is called amortization.

Escrow: taxes and insurance

Many lenders collect property taxes and homeowners insurance with your payment and hold it in an escrow account, then pay those bills for you. Escrow can change each year when taxes or premiums change, even though your principal and interest don't.

Extra principal

Any extra you pay toward principal reduces the balance right away, which cuts future interest and can shorten the loan. Many lenders let you mark extra payments as "principal only."

At tax time

Your lender sends Form 1098 showing the mortgage interest you paid, including interest prepaid at closing. Notch tracks this month by month so you're never surprised.