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Mortgage Amortization
Author: Lance Williams
A mortgage is a technique that is used to create a lien on real estate by a contract. It is an instrument that the borrower called the mortgagor uses to pledge real property to the lender called the mortgagee as a security for a debt. While going through the mortgage transaction a borrower has often to make payment of interest and a portion of the outstanding principal balance during each payment cycle. This is where mortgage amortization comes in.
Mortgage Amortization is the repayment of a mortgage loan by installments with regular payments to cover the principal and interest. It is the process of reducing principal and interest in equal installment payments at specific intervals over a set term.
A fully amortized loan payment is a portion of which will be applied to pay the accruing interest on the loan, with the remainder being applied to principal. Generally with each payment, you pay back part of the money originally borrowed (the principal) plus interest on the declining balance of the principal. The amount of your periodic payments depends, in part, on the principal, the interest rate and the length of time allowed for repayment. Thus in this way the loan is paid off in the specified term.
Amortization term is the amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. Amortization period is the length of time, commonly 25 years that it takes to completely pay off a mortgage through repayment of the original debt or principal and the accumulated interest. Assumption of a mortgage - the buyer of a property agrees to take over repayment of the current owner mortgage as part of an agreement to purchase the property, usually to save the current owner discharge costs or because the existing interest rate and term are attractive.
Negative Amortization is a loan in which the interest rate and payment may change independently from each other creating the potential for the principal balance of the loan to increase rather than decrease over the term of the loan. Negative amortization loans could land borrowers in trouble when interest rates rise and their monthly payments soar out of reach, the experts warn. It leaves borrowers with a higher principal and is a technical description of a financially poisonous loan.
About the author:
Lance Wiliams is an accomplished contributing writer for http://www.mortgagefit.com/ presently working in association with
http://www.mortgagefit.com/mortgage-amortization.html
He specialises in mortgage and real estate arena.
Article Keywords:
Home Loans
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As you may know, I have a very deep passion for real estate and mortgages. In
fact, this website is a true labor of love for me.
As publisher, one my many duties is to review the many books, programs
and courses about real estate and mortgages that are on the market today. I’ll
be honest with you. Most of them are garbage. (Although
I do strongly recommend the programs in the “Must Have” box
above).
But, let me tell you, when I came upon the following headline, I new
I found a winner…
“Learn How To Quickly Build At Least $40,000
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-Without Making Biweekly Mortgage Payments-Or Changing Your Current Mortgage.
Now, the reason I knew it was a winner was because of the name behind
the headline. Craig Romero. Many consider Craig to be one
of the true geniuses in our field. I have a lot of respect for
him, and I
urge you to drop what you are doing right now and click the link below... |
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