Ok, I think you should consult your own legal advisor. I do not know what you mean by "through an estate." Do you have a life estate? Or do you mean trust? Or are you the sole legal owner.
I also do not agree that you have to give a 1099 to your grandmother unless you are in a business.
I don't know what you mean "give a 1099" OR use an amortization table. You have to figure out how much of each payment is principal and how much is interest. How you do that should be spelled out in the mortgage contract. Using an fixed amortization table seems like the easiest way to go, but frequently the amounts of P and I change based on what day you pay the loan. That's why making an occasional extra payment can save you huge interest over a long large loan.
No matter what, you grandmother needs to report the interest received (not principal) as income. (Assuming she reported the gain in the year of sale or didn't have to because she lived there for enough time and the gain was < $250k). Reporting income is required even if there is no 1099.
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