What is 'amortization' in real estate finance?
Why The gradual repayment of a loan through scheduled payments of principal and interest Is Correct
Answer B: The gradual repayment of a loan through scheduled payments of principal and interest
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Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
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Key Terms to Know
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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