Finance
What does the term 'amortization' mean in the context of a mortgage loan?
AThe process of increasing the loan balance over time through deferred interest
BThe gradual repayment of a loan through scheduled payments covering both principal and interest✓ Correct
CThe penalty charged for paying off a loan before maturity
DThe adjustment of the interest rate on an ARM loan
Explanation
Amortization is the process of gradually paying off a loan through regular scheduled payments. Each payment covers interest and principal; early payments are mostly interest while later payments are mostly principal reduction.
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