Finance
The term 'amortization' in mortgage lending refers to:
AThe process by which the lender profits from the loan
BThe gradual repayment of a loan through scheduled principal and interest payments✓ Correct
CThe adjustment of interest rates on an adjustable-rate mortgage
DThe calculation of the total finance charges over the loan term
Explanation
Amortization is the process of paying off a loan through regular scheduled payments that include both principal and interest. Early in the loan term, most of the payment goes to interest; as the loan matures, more goes to principal. A fully amortizing loan is paid off at the end of its term.
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