What is Amortization?

What does amortization mean when talking about real estate? Amortization is the process of paying off your debt. Here's how it works.

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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[SMCloud]

My teacher linked this to one of our assignments and holy canoli this is so simple and for once I actually understand anything about my math class

[matthewgironda]

Great video for teaching my finance students, thank you!
(Just watch the spelling of "principal")

[markbortnovsky]

Superb explanation, thank you! Very helpful especially since english isn't my preferred language.

[tarevaligas]

I love all your videos you are an excellent teacher! You’re great at explaining things!!! I’m a realtor here in the Florida panhandle area! Btw 😌

[CafecitoWClaudia]

But if you do a 15 year mortgage doesn’t that mean you have to pay more monthly?

[sarahserwar]

INCREDIBLY SIMPLE AND USEFUL .. THANK YOU SO MUCH 🌹🥀

[taehyungkim]

Thank you so much for explaining it very well! I learned a lot in just almost 4 minutes. Keep up the coolness and great work! More power!

[raymundocardonakwsf]

Awesome video! Keep up the great content!

[luisrojo]

Difference between Amortization and Full Amortization?

[brekiarnz]

This doesn't makes sense. Doesn't this increase the likelihood people will default on their loan if they're paying interest at the start of the loan? Wouldn't the bank make more money if they charged the same amount of interest instead of a sliding scale of interest?

[nickdeaynov]

This is good sells pitch but in the reality not Some Tim’s renting is better then buying some time buying is better then renting Depend on the place in the cycle you are

[nathand]

poor advice your house is not an asset