Finance
What is 'amortization' in a Delaware mortgage loan?
AThe process of adding fees to the loan balance over time
BThe gradual repayment of a loan through regular, scheduled principal and interest payments over the loan term — each payment reduces the outstanding balance until the loan is fully paid✓ Correct
CThe adjustment of an ARM rate based on market conditions
DThe process of writing off the original cost of a property for tax purposes
Explanation
Amortization is the systematic repayment of a loan through regular payments. Each payment covers the current period's interest and a portion of principal. Early in the loan, most of the payment is interest; as the balance decreases, more of each payment goes to principal. A fully amortizing loan is paid off to zero by the final payment.
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