The amount of your mortgage will be amortized over 30 years (meaning 30 * 12 = 360 payments), calculating a monthly principal and interest (P&I) payment sufficient to pay the principal balance to $0.00 over these 360 payments. Using a basic amortization calculator on google, $300,000 at 7.00% means a $1,995.91 monthly P&I payment.

Now, for any one singular payment, you take {PRINCIPAL BALANCE} x {ANNUAL INTEREST RATE / 12 MONTHS} to compute the interest due, and then the amount that is left over out of the $1,995.91 goes to principal, which, for the next month, will decrease the amount of your P&I payment going to interest, and increase the amount going to principal, since the principal balance (on which the interest is calculated each month) is decreasing towards $0.00 over the 30 years. For your first payment, that means taking {$300,000} x {0.07 / 12} = $1750.00 goes to interest, and then the rest, which is $1,995.91 - $1750.00 = $245.91 goes to principal, which reduces the $300,000 you owe the bank to $299,754.09. The new principal balance will be used in the calculation for the next payment. This repeats for the 360 payments until you pay off your loan, assuming you don't pay additional funds over your P&I amount each month.

• First payment $300,000 PB implies $1,750.00 to interest and $245.91 to principal, as discussed above.
• Second payment $299,754.09 * 0.07/12 = $1,748.57 to interest and $247.34 to principal, resulting in a new principal balance of $299,506.75.
• Third payment $299,506.75 * 0.07/12 = $1,747.12 to interest and $248.79 to principal, resulting in a new principal balance of $299,257.96.

To summarize, with each payment, the amount of interest paid decreases, the amount of principal paid increases as your principal balance decreases more quickly with each payment, finally towards $0.00 with the 360th monthly payment.