Amortization

Quick Summary

The total timeline used to calculate your mortgage payments.

ELI5 Explanation

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It is the long runway that spreads payments out so monthly costs are smaller.

Detailed Explanation

Amortization is usually 25 to 30 years for insured or conventional mortgages, while private deals may model 30 to 40 years. The term can still be only 12 months even with a long amortization schedule.

Example

A borrower takes a one-year private mortgage using a 30-year amortization to keep payments manageable.

Why It Matters

It shapes payment size and refinance flexibility.