Amortization stems from the word "mort" for death - the gradua...

Suggestion by Spedidiot on 2008-11-05 21:43:46

Amortization stems from the word "mort" for death - the gradual death of a liability. There are standard schedules of amortization, and there are schedules that still have a balloon payment at the end. For instance, one could have a loan with a 15 year term, but a 20 year amortization schedule. This allows a lower payment, and therefore a lower principle paydown, creating a balloon payment at the end of 15 years.

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