Finance
What is 'amortization' in real estate financing and how does it work?
AThe process of depreciating property value over time
BThe gradual repayment of a loan through regular principal and interest payments, with each payment reducing the outstanding balance until the loan is paid off✓ Correct
CThe annual recalculation of the interest rate on a fixed loan
DA tax deduction available to Idaho mortgage holders
Explanation
Amortization is the process of paying off a loan through scheduled payments of principal and interest. Early payments are mostly interest (when balance is high); later payments are mostly principal (as balance decreases). A fully amortizing 30-year loan has equal monthly payments that pay off the entire balance by the end of year 30. Idaho deeds of trust are typically fully amortizing.
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