Finance
In South Carolina, what is 'amortization' in a mortgage?
AThe process of determining the property's appraised value
BThe gradual repayment of a loan through regular payments of principal and interest over the loan term✓ Correct
CThe calculation of property taxes on a mortgaged property
DThe lender's right to accelerate the loan upon default
Explanation
Amortization is the scheduled repayment of a loan through regular payments that cover both interest and principal. Early payments are primarily interest; later payments are primarily principal.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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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