What term refers to the process of paying off a mortgage over time?

The process of paying off a mortgage over time is referred to as amortization. This term encompasses the gradual reduction of the principal balance of a loan through a series of scheduled payments. Each payment typically consists of both principal and interest components, allowing homeowners to systematically pay down their debt until the mortgage is fully retired. Amortization schedules provide clarity to borrowers about how their payments are applied over time, detailing the amounts that go toward interest versus the principal.

Understanding amortization is crucial for mortgage salespeople, as it helps them to explain loan structures to clients and assist them in financial planning. By clearly articulating this process, mortgage professionals can help clients understand the long-term implications of their financing choices and how their debt will be managed over the life of the loan.