Finance
The 'amortization' of a Maine mortgage means:
AThe increase in property value over time
BThe gradual repayment of the loan through regular principal and interest payments✓ Correct
CThe depreciation of the structure for tax purposes
DThe annual increase in the interest rate
Explanation
Amortization refers to the process of gradually paying off a debt through regular payments of both principal and interest, so that the loan balance declines to zero by the end of the loan term.
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Key Terms to Know
Amortization
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.
Math Concepts
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