What is “Amortization?”

What is AmortizationLast year I taught you the definition of the word MORTGAGE. “Mort” meaning Dead and “Gage” being a pledge… so a mortgage is your “death pledge.”

Today I want to teach you about the word AMORTIZATION.
Amortization is the way banks calculate the repayment of your “death pledge” or mortgage.

You see, when you sign for a mortgage, your loan officer is required by law to review what they call an amortization schedule with you. Which is a breakdown of every payment, most likely for 30 years or 360 monthly payments. With each payment broken down into 2 pieces, principal and interest.

Want an eye-opening experience about how much interest you could end up paying on your home if you’re not careful?

Just go online and Google “amortization calculator.” Find one and plug in your loan details. Then pull up the schedule of payments.

Pay close attention to the end of the term, and how much interest will accumulate. This may be a shocker for you. But don’t worry.

Now that you know how much interest you will be paying over the life of the loan if you continue paying it off the conventional, one-month-at-a-time way like most people do…

You should have all the motivation you need to do what you have to do to pay it off quickly.

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