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What is amortization of a loan?

Amortization is the process of spreading out a loan into a series of fixed payments. The loan is paid off at the end of the payment schedule. Amortization is the way loan payments are applied to certain types of loans.

What is an Amortized mortgage?

With an amortized loan, your mortgage is guaranteed to be paid off by the end of the term as long as you make all your payments over the life of the loan. Here’s an example of how an amortization schedule would look for the following loan: Each payment is the same total amount ($1,123).

What is amortization in accounting?

Amortization is an accounting technique used to periodically lower the book value of a loan or an intangible asset over a set period of time. Concerning a loan, amortization focuses on spreading out loan payments over time. When applied to an asset, amortization is similar to depreciation .

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