What does amortization mean when talking about real estate? Amortization is the process of paying off your debt. Here's how it works.
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Amortization refers to the process of paying off a debt over time through regular installments. This is often used with loans or mortgages, where the borrower makes monthly payments that include both principal and interest. The principal is the amount of the loan or mortgage, while the interest is the cost of borrowing the money.

As the borrower makes payments, the principal balance decreases and the interest balance decreases. This is known as amortization, and it helps the borrower pay off the debt gradually rather than in one lump sum.

Amortization can be calculated using an amortization schedule, which is a table that shows the breakdown of each payment over the life of the loan. The schedule typically shows the principal balance, interest balance, and total payment amount for each period, as well as the remaining balance after each payment.

In summary, amortization is the process of paying off a debt through regular installments that include both principal and interest. It's a useful tool for managing debt and understanding the breakdown of each payment over time.

Chapters:
00:00 - When will you see amortization in real estate?
00:39 - What does amortization mean?
00:49 - How does amortization work?
02:55 - Should you rent or buy a house?

#amortization #homebuyer #mortagepayment
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