Amortization
Real estateGlossary term
Definition
The process of paying off debt through regular payments over time. Each payment covers both principal and interest, with the interest portion decreasing and principal portion increasing over the loan term.
Related terms
- MortgageA loan used to purchase real estate where the property serves as collateral. The borrower makes regular payments over a set term (typically 15-30 years) until the loan is paid off.
- PrincipalThe original amount of money borrowed in a loan or invested, excluding interest. As you make loan payments, a portion goes toward reducing the principal.
- Interest RateThe percentage charged by a lender for borrowing money, or earned on savings and investments. Can be fixed or variable depending on the financial product.
Get advice that uses your real numbers
Warren reads your accounts and explains what terms like this mean for your plan. Free to start, no credit card required.