Finance
Amortization in a mortgage refers to:
AThe process of increasing loan payments over time
BThe gradual reduction of a loan balance through scheduled principal and interest payments✓ Correct
CThe annual adjustment of an ARM interest rate
DThe penalty for early repayment of a mortgage
Explanation
Amortization is the gradual reduction of the loan balance through scheduled payments that cover both interest and principal. In the early years, most of each payment goes toward interest; over time, more goes toward principal.
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