Amortization is the process of gradually paying off a debt over time through regular payments, which include both principal and interest. This structured repayment schedule is commonly used in loans such as mortgages, car loans, and personal loans.
Amortization refers to the process of paying off debt over a specific period of time through regular payments of principal and interest, ultimately resulting in the full repayment of the loan by the end of the term.
An amortized loan is a type of loan where the borrower makes regular, scheduled payments that include both principal and interest, gradually reducing the balance over the loan's term.
A borrower is a person or entity that has received a loan and is obligated to repay the amount borrowed, often with interest and other fees, according to the loan terms. The term is commonly used interchangeably with 'debtor.'
Carrying charges refer to the ongoing expenses necessary for holding a property, such as taxes, interest on loans, insurance, and maintenance costs. These charges are pertinent to both idle properties and properties under construction.
In mortgage finance, a deficiency refers to the shortfall of funds recovered through the sale of a property that had secured a foreclosed loan compared to the total debt owed. This typically includes the unpaid loan balance, accrued interest, foreclosure expenses, and any damages incurred by the lender.
The Full Amortization Term is the amount of time it will take for a mortgage to be fully paid off through periodic payments of principal and interest. It specifies the duration within which the loan balance will reach zero, taking into account both the repayment of principal and the interest charges.
A fully amortized loan is a type of loan repayment structure where regular payments of both principal and interest are made over the course of the loan term, resulting in the total loan being paid off by the end of the term.
Interest in real estate can refer to both the cost associated with borrowing money to finance real estate transactions and the extent of ownership in a property.
An interest-only loan is a type of financing where the borrower only pays the interest on the principal balance at regular intervals until the loan reaches its maturity date, at which time the full principal amount becomes due. This type of loan does not require amortization during the length of the loan term.
A kicker is a payment required by a mortgage, in addition to normal principal and interest, often linked to a borrower’s financial performance metrics such as gross sales or profits.
Ordinary income refers to any type of income that is taxed according to the standard income tax rates established by taxing authorities. This category includes wages, salaries, commissions, interest, and other types of income that do not receive special tax treatment like long-term capital gains.
Outstanding balance is the amount currently owed on a debt after accounting for payments already made toward the principal and interest. It is a key figure in managing financing and understanding one’s debt obligations.
P&I, or Principal and Interest, payments refer to the periodic payments made on a mortgage or loan that include both the loan principal and the interest accrued. These payments are common in various types of loans, including mortgages, auto loans, and personal loans.
Portfolio income consists of earnings derived from various investment activities including interest, dividends, royalties, and capital gains from the sale of investment property. It differs from earned income and cannot be used to offset passive activity losses.
Principal, Interest, Taxes, and Insurance (PITI) are the four components typically included in a single monthly mortgage payment on an amortizing loan.
Semiannual refers to an event or occurrence that happens twice a year, in other words, once every six months. In real estate and finance, semiannual terms often apply to payments, interest, and reporting periods.
