Amortization can best be described as the payment schedule of the loan.  Specifically the total principal + interest payments are identified each month for the entire portion of the repayment term.  In other words, let's say it is a 30 year term...that would be 360 months.  Let's say the total principal + interest portion of the payment was $2000 each month.  The schedule would show each month (1 - 360) and identify how much of the $2000 goes to "principal" (lowering the loan amount) versus "interest" (the ongoing cost of borrowing the money). The new "principal balance" is shown each month on the amortization schedule (to display the updated principal balance each month). Eventually, you get to a ZERO principal balance, signifying that the loan has been paid in full on the final month (#360).

Thank you Thomas J. Nelson, Realtor, ePRO, CRS, RCS-D for looping me in.

I say, call this guy Jason E. Gordon if you want to know about loan amortization.

Great explanation from Jason E. Gordon!

That is a question that rarely gets asked of me. What they really care about is: can I afford the monthly payments?

I suggest they go to an online financial calculator or have their lender produce one.

That is a lenders responsibility.   

A lender can answer the question.

I have never been asked that. If I ever am, I will refer them to their lender to explain it.

I don't.  That's the lender's job.

Amortization isn't really an agent issue.  It's good to understand but not something you need to get into with your clients. It is an issue of financing.  You must be in the lending section of your studies. 

I don't. This is a topic for the mortgage lender to cover off with a borrower.

Jason E. Gordon has you covered.

Simply show them the figures.

I don't get asked that question but it is a payment schedule. The mortgage person goes over that with the client

Call Jason E. Gordon !

To amortize is to gradually reduce over a period of time. Amortization can be positive or negative. And everything that Jason said.

google it .....

I can't say that it's ever come up but If I had to explain it is pretty simple. It's a payment schedule where you pay down mostly interest & a little principal at the beginning of the loan & over the long haul that shifts to paying down more principal & less interest.

A set monthly payment to provide a flow of income while reducing the principal amount to zero over a set period of time!

I don't explain what it is but I will comment about how it works kennith Frazier . I explain how it's interest loaded at the front end and how they can shorten their term by adding extra earmarked towards principal.

I let the buyer's lender explain it. But Jason E. Gordon has a great answer!

In 20 years of being a Realtor, no client has ever asked that particular question.

All my contact with MY clients is focused on results....

It is not really anything that is asked of me, but i do know if they do ask. In teh old days we actually pre qualifed our own buyers. But now it is all done online. 

My investors know this already.

If you don't know, look up the definition and paraphrase it.

I don't.  I refer them to one of my preferred lenders for that explanation.  I am not a financial consultant, nor am I insured to behave like one.

I wish you all the best with your real estate studies.

that's what loan officers are for.... I don't wear that hat!