What is mortgage amortization?


Quick Answer

Mortgage amortization is the payment of debt on a home using a schedule of fixed payments prescribed at the beginning of a mortgage loan period, explains Investopedia. The amount of the payments depends on the length of the repayment period and the interest rate on the loan.

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Full Answer

A key feature of a typical mortgage loan amortization is that the amount of payments that go toward principal increases with each payment, notes Investopedia. The amount put toward interest diminishes because each payment decreases the overall balance that remains on the loan. A mortgage amortization schedule shows a breakdown of all payments, including amounts toward principal and interest, for the entire length of a mortgage repayment period.

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