Some other questions. What is the "quoted" interest rate on the loan? Is it a fixed or variable rate loan? After making payments for 8 years and only reducing the principle by $1,500, something doesn't sound right (obviously!).

If you give me the information I requested above, I can whip up a quick amortization schedule in Excel to show you where your principle SHOULD be given those known factors.

Provide the following just be sure: original principal amount (total amount borrowed at the time of the loan) EDIT: $40,000, interest rate, time period (e.g, 15 year loan, 30 year loan). I will assume that you are making monthly payments since this is a mortgage.

ADDITIONAL INFO
Your payment is comprised of principal and interest as well as escrowed taxes and insurance (if required). Also, it may include PMI (Private Mortgage Insurance) if you didn't have a down payment equal to 20% of the principal at the time the loan was taken out. All the other stuff aside, the interest portion of your payment decreases immediately with the second payment and the amount of principal reduction per payment increases. This is hard to notice because it's relatively small at first (especially with a 30 year mortgage with a total of 360 payments!).

As Tracy stated, your interest costs are a function of your principal balance. If you get that principal down, your interest costs (both per payment and in total) will go down as well. For the payment, this is good because you reduce your principal payment even further with each additional payment.

For my mortgage, I pay biweekly. This gives me a "13 payments per year" effect with the last (13th) payment being applied to principal. Also, I pay extra each month on the principal as well. I made sure that my loan included the "pay off early without penalty" provision. With that being the case, I'm hoping to have my 30-year loan paid in about half that time!