Amortization

Amortization

Amortization is the process by which a mortgage loan is paid off over time through structured, regular payments. This process occurs within a specified time frame and varies based on the terms of your mortgage.

Your monthly mortgage payments are allocated to cover both the principal (the original loan amount) and the interest charged on the loan. The way these funds are distributed changes over the course of the loan. In the early stages of the mortgage, a larger portion of your payment goes toward interest. As time progresses, this distribution shifts, and a greater share of your payment is applied to the principal balance.

The amortization schedule provides a detailed breakdown of your monthly payments, indicating how much goes toward principal and interest. Understanding this breakdown can help you make informed decisions regarding prepayments or refinancing options. For instance, if you foresee a significant amount going toward interest, you may consider opting for a loan with a shorter amortization period. Therefore, reviewing and comprehending your amortization schedule is crucial for effective financial planning concerning your mortgage.

Reverse Mortgage

A reverse mortgage’s loan balance grows over time since payments start only when the borrower moves or dies. A popular choice for seniors to supplement income.

Loan Term

A loan term is the period during which a borrower makes monthly payments on a home loan. It can change based on the borrower’s payment habits and refinancing.

FHA Refinance

Refinancing can be done with the current lender or a new one, replacing the mortgage with a new loan to secure lower rates or access home equity.

Bankruptcy

Declaring bankruptcy means you’ve told a court that you can’t pay your debts. This process harms your credit score, making it harder to get loans later on.

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