Brad, think of it this way. Let's say you had a simple interest loan of $500,000 at 5% and you pay off $100,000 of principal a year. Basically you'd have:

Year 1: $25,000 interest, $125,000 total payments

Year 2: $20,000 interest, $120,000 total payments

Year 3: $15,000 interest, $115,000 total payments

Year 4: $10,000 interest, $110,000 total payments

Year 5: $5,000 interest, $105,000 total payments

Just like a mortgage, at the beginning a lot more of your payment is interest than principal. In essence, all they've done with the mortgage, is come up with a payment figure so that all 5 years give you identical payments... again, very simplistically, using the above example but making payments of $115,000 each year...

Year 1: $25,000 interest, $115,000 payments, new balance $410,000

Year 2: $20,500 interest, $115,000 payments, new balance $315,500

Year 3: $15,775 interest, $115,000 payments, new balance $216,275

Year 4: $10,800 interest, $115,000 payments, new balance $112,075

Year 5: (fudged to work out since I'm not a mortgage amortization program

$2,925 interest, $115,000 payments, new balance $0.

In both cases you're still paying 5% on the outstanding principal, you're just paying less principal in the early years and more in the later to make your total payments the same.