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Amortization – what does that mean?

Amortization is the gradual elimination of a debt, such as a home mortgage, in regular payments over a specified period of time. It factors in both interest and principal of the loan. An amortization schedule shows every scheduled payment over the life of the loan, tracking how much of each payment reduces the original loan amount. Amortization schedules are a helpful planning tool to understand how much you will owe after any number of payments or compare loan offers to see how much interest you may pay.

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