Amortization
The gradual repayment of a loan through regular payments that cover both interest and principal until the balance reaches zero.
Quick flashcard
What does Amortization mean on the Texas real estate exam?
Answer: The gradual repayment of a loan through regular payments that cover both interest and principal until the balance reaches zero.
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Amortization definition
Amortization is the process of paying off a loan through scheduled payments over time. Each payment covers the interest due plus a portion of the principal. Early in a fully amortized loan, most of each payment goes to interest, and later most goes to principal.
A fully amortized loan reaches a zero balance at the end of its term. A partially amortized loan leaves a balloon payment due at the end.
Source basis
Definition checked against the official sources below on .
On the exam
Exam trap
Tested in
Financing & Settlement (7 of 80 National)
From definition to recall
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