Definition
The process of paying off a mortgage through regular monthly payments of principal and interest over the loan term. In the early years, most of each payment goes toward interest. As the loan matures, a larger portion goes to principal. A 30-year amortization schedule shows exactly how each payment is split between principal and interest.
Related Mortgage Terms
- Interest Rate
The cost of borrowing money, expressed as a percentage of the loan amount charge...
- Principal
The original amount of money borrowed for a mortgage, not including interest. As...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
- Appraisal
A professional assessment of a property's market value conducted by a licensed a...
- Closing Costs
Fees and expenses paid at the finalization of a real estate transaction, typical...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.