Thanks for visiting The Mortgage Reports. To stay absolutely current on mortgage markets and important guideline changes, be sure to take my free daily email alerts.

When banks make fixed-rate, principal + interest home loans, a borrower's monthly payment gets calculated from amortization schedules (ah-mor-ti-ZAY-shun).  With respect to mortgages, amortization is the process of paying a loan to $0 over time.

The Early Years Are Interest-Payment Heavy

For homeowners, a mortgage amortization schedule's most important trait is that it creates interest-heavy repayments in a loan's early life, with very little principal reduction.

At today's rates, it would take 20 years to reduce the principal balance on a 30-year, fixed-rate product by half.

Amortization schedules are "bank-friendly".

Having said that, the schedules bring benefit to homeowners, too. This is because mortgage interest is often tax-deductible.  The early, interest-heavy years of a loan, therefore, can provide larger tax benefits to homeowners than the interest schedule throughout the loan's later years.

Compare Payback Schedules

Here's some stats. Comparing different $300,000 loans at a rate of 5 percent, after 10 years:

• A 15-year mortgage has been paid down by 58 percent
• A 20-year mortgage has been paid down by 38 percent
• A 30-year mortgage has been paid down by 19 percent

After 15 years, the numbers look similarly disproportionate:

• A 15-year mortgage has been paid in full
• A 20-year mortgage has been paid down by 65 percent
• A 30-year mortgage has been paid down by 32 percent

And then, as interest rates climb, the numbers get more skewed in favor of the banks. At a 6.5 percent mortgage rate, for example, after 15 years, a 30-year fixed is barely one-quarter paid.  The bulk of the amortization doesn't happen until the last 5 years of the loan.

During the first few years with an amortizing home loan (i.e. principal + interest), homeowners often feel like their entire monthly payment is going towards interest.

Well, not all of it goes towards interest, the graph tells us.  Just most of it.

If you're in the early years of mortgage, though, and want to accelerate your "break-even" date to before Year 18, there are several ways to do it:

1. Make a one-time, extra principal payment to your mortgage lender.
2. Make monthly principal "pre-payments" to your mortgage lender.
3. Remortgage into a lower rate mortgage, paying points if necessary.  Pay your monthly "savings" back to your mortgage lender monthly as a principal "pre-payment".

Each of these options has its own specific math so ask your loan officer for help as it relates to your personal amortization schedule.

However, it's important to understand that each of these options constitutes its own "mortgage plan" and may not be appropriate for your individual situation.  Accelerating principal payback can create huge financial rewards, but it also carries pretty big risks, too.

For example, once you've given those extra dollars to the bank, getting them back can be a real challenge.

The bank doesn't just hand over your the money because you've been a model citizen, after all. You have to apply for a new, cash-out home loan just like everybody else.  And -- in case you haven't noticed -- banks haven't been too keen on cash-out remortgages these days.

So, there would be two possible outcomes:

1. The bank approved your request for a cash-out remortgage and you pay bank fees to get access to your own money
2. The bank declines your request for cash-out remortgage and you can't get access to your money at all

Either outcome can be costly so that's why you should be sure that a principal repayment strategy is in line with your overall long- and short-term financial goals before sending even $1 more to your lender.

Or, as an alternative strategy, you can also try this: Make extra principal repayments to yourself.

Each month, take the dollars that you were going to send to your lender and put them in a high-yielding savings account instead.  Make sure the account is FDIC-insured and then let the interest in that account compound over time.

By keeping the money liquid (but earmarked for your mortgage), you can have cash on hand for an emergency and pay it towards your principal later -- if it still makes sense for your plan.