Finance
What is 'amortization' in the context of a mortgage loan?
AThe process of increasing the loan balance over time
BThe gradual repayment of principal through scheduled periodic payments✓ Correct
CThe lender's fee for originating the loan
DThe adjustment of an ARM rate based on an index
Explanation
Amortization is the process by which regular mortgage payments reduce the loan principal over time. Early payments are mostly interest; later payments are mostly principal.
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