Accelerated Amortization
Definition of 'Accelerated Amortization'Extra payments made towards paying down a mortgage principal. With accelerated amortization, the loan borrower is allowed to add additional payments to their mortgage bill in order to pay off a mortgage before the loan settlement date. The benefit of doing so is reduced overall interest payments. |
|
Investopedia explains 'Accelerated Amortization'For example, take a mortgage originated for $200,000 at 7% interest for 30 years. The monthly principal and interest payment is $1330.60. Increasing the payment by $100 per month will result in a loan payoff period of 24 years instead of the original 30 years, saving the borrower six years of interest. Paying a mortgage in an accelerated manner decreases the loan premium faster and diminishes the amount of additional interest the borrower is required to pay on the loan. |
Related Definitions
Articles Of Interest
-
Mortgage Points: What's The Point?
Learn how to pay less for your home in the long run, or save in the short run. -
Understanding Your Mortgage
We walk through the steps needed to secure the best loan to finance the purchase of your home. -
Mortgages: How Much Can You Afford?
Answering this means number-crunching as well as factoring in other considerations and expenses. -
Home-Equity Loans: What You Need To Know
We shed light on why consumers decide to use this form of debt and whether it is a good alternative. -
Understanding The Mortgage Payment Structure
We explain the calculation and payment process as well as the amortization schedule of home loans. -
To Rent Or Buy? The Financial Issues
Thinking of buying a home? We look at the initial and ongoing costs as well as the so-called benefits. -
6 Tips For Selling Your Home Fast
Find out what you can do to stand out from the competition and make your home an easy sell. -
5 Smart Ways To Use Your Tax Return
This year, find out how to stretch your tax refund further to strengthen your future. -
Common Liabilities That Hurt Your Net Worth
Every penny that you keep out of the liability side of the net worth equation essentially ends up on the asset side. -
The Dangers Of A Reverse Mortgage
In many circumstances, a reverse mortgage can be a risk to your financial security. Here are six dangers you should consider before signing on the bottom line.
Free Annual Reports