Amortization
The gradual repayment of a loan through regular payments that cover both interest and principal until the balance reaches zero.
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.
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A security instrument that pledges real property as collateral for a debt. In Texas, lenders use a deed of trust to play this role.
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The borrower's written promise to repay a debt, which is the instrument that actually creates the obligation.
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A mortgage whose interest rate changes over time based on an index plus a fixed margin, subject to rate caps.
This definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.