Francisco Williams, CCIM
Glossary

Structure

Amortization

The schedule by which a loan is repaid over time, gradually reducing principal while paying interest on the remaining balance.

A 30-year fixed mortgage is "fully amortizing" — each monthly payment covers part of the interest owed plus a slice of principal. In early years, most of the payment goes to interest; in later years, most goes to principal.

This is why paying an extra $100/month toward principal in year 2 saves you far more in total interest than doing the same in year 22 — you eliminate all the future compounded interest on that $100.

Non-fully-amortizing loans exist too: interest-only loans, bridge loans, and some non-QM products have structured payment periods that don't pay down principal during the initial term.

Rates shown are illustrative and subject to change without notice. Actual rate, APR, and terms will depend on creditworthiness, loan-to-value, property type, occupancy, loan amount, loan program, and other factors. Not all applicants will qualify.

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