Why don’t mortgage payments decrease each month to reflect the lower balance on the principal?
In: Economics
Because instead of doing that you are paying off the principal faster and faster.
Mortgages are designed to last for a certain period of time. The payments are engineered so that the loan lasts that period of time with consistent payments. So early payments will mostly be covering interest plus some principal, but each payment makes the interest payment smaller (less balanced requiring interest) while the principal payment gets larger.
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