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. -
How Interest Rates Affect The Housing Market
Understand how rate changes can affect home prices, and learn how you can keep up. -
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.
Free Annual Reports