Definition
The gradual repayment of a loan through regular payments that cover both interest and principal, retiring the balance by the end of the term.
Example
On a 30-year loan, the first payment is mostly interest; by year twenty the split has reversed.
Related terms
- Acceleration Clause
- Accrued Interest
- Adjustable Rate Cap
- Adjustable-Rate Mortgage
- Annual Percentage Rate
- Assumable Mortgage
Frequently asked questions
What does Amortization mean in real estate?
The gradual repayment of a loan through regular payments that cover both interest and principal, retiring the balance by the end of the term.
How is Amortization used in practice?
On a 30-year loan, the first payment is mostly interest; by year twenty the split has reversed.
This definition is provided for educational purposes. Legal and tax terminology can carry jurisdiction-specific meaning — confirm with a licensed professional before relying on it in a transaction.