Amortization calculates how loans (like fixed-rate mortgages) are allocated towards principal and interest payments over the loan term. It may also refer to an accounting method that expenses the cost of an intangible asset over time on a company’s financial statements. Note: Amortization in accounting is covered below.
An amortization schedule is a chart that shows the amounts of principal and interest due for each loan payment of an amortizing loan.An amortizing loan is a loan that requires regular payments, where each payment is the same total amount.
For mortgages, negative points are a strategy for qualified borrowers to decrease the amount of cash they need upfront to finance their home.A mortgage company will pay fees and closing costs on the borrower’s behalf (in the form of points) in exchange for a higher interest rate on the mortgage. Negative points are also known as rebates, yield spread premiums, or no-cost mortgages.