What does 'amortization' mean in a mortgage context?
An example of an AI chatbot conversation about mortgage terminology.
What does 'amortization' mean in a mortgage context?
Amortization refers to the process of paying off a loan over time through regular payments. In a mortgage, it means that each payment reduces the principal amount owed.
How is amortization calculated?
Amortization is calculated using a formula that considers the loan amount, interest rate, and loan term. It determines how much of each payment goes toward interest and how much goes toward the principal.
What is the difference between fixed-rate and adjustable-rate mortgages?
A fixed-rate mortgage has a constant interest rate throughout the loan term, while an adjustable-rate mortgage (ARM) has an interest rate that may change periodically based on market conditions.
Can you explain what 'equity' means in relation to my home?
Equity is the difference between your home's market value and the amount you owe on your mortgage. It represents your ownership stake in the property.
What are closing costs?
Closing costs are fees and expenses you pay when finalizing a mortgage, including appraisal fees, title insurance, and attorney fees.
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