what does amortization mean
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What does amortization mean? What is 'Amortization'. Amortization is the paying off of debt with a fixed repayment schedule in regular installments over a period of time for example with a mortgage or a car loan.
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Loan terminology glossary Amortized Loan: A loan to be repaid, by a series of regular installments of principal and interest, that are equal or nearly equal, without any special balloon payment prior to maturity. Anniversary Date: The date upon which the twelfth payment is due.
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Definition of 'amortization' Amortization is a situation in which the value of intangible assets such as patents falls because of their age or how much they have been used. 1  This figure represents operating profit before depreciation and amortization. 2  The purpose of amortization is to reflect resale or redemption value.
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Amortization 1 4 External links. 2  When used in the context of a home purchase, amortization is the process by which loan principal decreases over the life of a loan, typically an amortizing loan.
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What is 'Amortized Loan' What is an 'Amortized Loan'. An amortized loan is a loan with scheduled periodic payments that consist of both principal and interest. An amortized loan payment pays the relevant interest expense for the period before any principal is paid and reduced. This is opposed to loans with interest-only payment features, balloon payment features and even negatively amortizing payment features.
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amortize Amortize derives via Middle English and Anglo-French from Vulgar Latin admortire, meaning to kill. The Latin noun mors (death) is a root of admortire; it is related to our word murder, and it also gave us a word naming a kind of loan that is usually amortized: mortgage.
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What does amortization mean? DEFINITION of 'Amortization'. 1. The paying off of debt with a fixed repayment schedule in regular installments over a period of time. Consumers are most likely to encounter amortization with a mortgage or car loan. 2.
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amortize transitive verb. 1 : to pay off (an obligation, such as a mortgage) gradually usually by periodic payments of principal and interest or by payments to a sinking fund amortize a loan. 2 : to gradually reduce or write off the cost or value of (something, such as an asset) amortize goodwill amortize machinery.
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Loan Amortization Schedule An amortization schedule is a list of payments for a mortgage or loan, which shows how each payment is applied to both the principal amount and the interest. The schedule shows the remaining balance still owed after each payment is made, so you know how much you have left to pay.
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What Does Amortization Mean? Fixed-Rate Mortgages. By making regular payments toward a mortgage, you reduce the balance of both principal and interest. A fixed-rate mortgage fully amortizes at the end of the term. In the case of a 15-year fixed-rate mortgage, the loan is paid in full at the end of 15 years.his will give you the first month's interest payment. Subtract that interest payment from the total payment to learn the principal amount. To figure the principal and interest payments for subsequent months, subtract the first month's payment from the mortgage balance, then repeat.
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Amortization schedule An amortization schedule indicates the specific monetary amount put towards interest, as well as the specific amount put towards the principal balance, with each payment. Initially, a large portion of each payment is devoted to interest.
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amortize amortizing. 1  transitive verb. 2  1 : to pay off (an obligation, such as a mortgage) gradually usually by periodic payments of principal and interest or by payments to a sinking fund amortize a loan. 3  2 : to gradually reduce or write off the cost or value of (something, such as an asset) amortize goodwill amortize machinery.
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- Amortization refers to spreading the cost of an intangible asset over its useful life. Depreciation refers to prorating the cost of a tangible asset over its estimated life. Intangible assets include patents, copyrights, and intellectual property. Tangible assets include land, buildings, equipment, and vehicles.
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- Understanding an Amortization Schedule. An amortization schedule is a record of your loan or mortgage payments, showing, payment number, payment date, payment amount (and a breakdown of how much is principal and how much is interest) and the balance owing after that payment has been made. For a detailed explanation continue reading below.
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- Amortization Schedule. What is an 'Amortization Schedule'. An amortization schedule is a complete table of periodic loan payments, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term.
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- Amortization is used to calculate monthly mortgage payments. Straight-line amortization is a method of calculating fixed periodic payments for a mortgage loan and assigning shifting amounts for principal and interest payment each period.
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- Amortization is the deduction of capital expenses over a specified time period (typically the life of an asset), which in the case of oil and gas, refers to tangible non-drilling costs sustained while developing the reserves.
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Amortization schedule An amortization schedule indicates the specific monetary amount put towards interest, as well as the specific amount put towards the principal balance, with each payment. Initially, a large portion of each payment is devoted to interest. As the loan matures, larger portions go towards paying down the principal.
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How Amortization Works Amortization happens when you pay off a debt over time with regular, equal payments. At the beginning of the loan, your interest costs are at their highest. Especially with long-term loans, the majority of each periodic payment is an interest expense, and you only pay off a small piece of the balance.
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- amortize ‎(third-person singular simple present amortizes, present participle amortizing, simple past and past participle amortized) (transitive) To alienate (property) in mortmain.
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What is the Difference Between Term and Amortization The term of the mortgage should not be confused with the amortization. The amortization of the mortgage refers to the entire length of time that it will take for the mortgage to be paid and the house to be thusly, free and clear. The term is the period for which your current payment obligations are valid.
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What does it mean to amortize a loan? Q&A. To amortize a loan usually means establishing a series of equal monthly payments that will provide the lender with 1) interest based on each month's unpaid principal balance, and 2) principal repayments that will cause the unpaid principal balance to be zero at the end of the loan.
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Types Of Bonds BREAKING DOWN 'Amortized Bond'. Amortization is an accounting method that gradually and systematically reduces the cost value of a limited life, intangible asset. Treating a bond as an amortized asset is an accounting method in the handling of bonds.Amortizing allows bond issuers to treat the bond discount as an asset over the life of the bond (until the bond's maturity). RELATED TERMS.reating a bond as an amortized asset is an accounting method in the handling of bonds. Amortizing allows bond issuers to treat the bond discount as an asset over the life of the bond (until the bond's maturity). RELATED TERMS.
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Amortization Amortization Term Concept of Amortization Term in the context of Real Property A short definition of Amortization Term: The time required to pay off a mortgage if no additional principal payments are... Depletion See also An exhaustion or gradual reduction of an asset.
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- DEFINITION of 'Amortization'. 1. The paying off of debt with a fixed repayment schedule in regular installments over a period of time. Consumers are most likely to encounter amortization with a mortgage or car loan. 2.The spreading out of capital expenses for intangible assets over a specific period of time (usually over the asset's useful life) for accounting and tax purposes.Amortization is similar to depreciation, which is used for tangible assets, and to depletion, which is used with natural resources.. The spreading out of capital expenses for intangible assets over a specific period of time (usually over the asset's useful life) for accounting and tax purposes. Amortization is similar to depreciation, which is used for tangible assets, and to depletion, which is used with natural resources.
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Differences Between Amortizations & Accruals Amortization is the systematic recognition of an income or expense related to an accrual or other asset. Whereas accruals create assets or liabilities, amortizations create income or expense.