Fully Amortizing Payment

AAA

DEFINITION of 'Fully Amortizing Payment'

A periodic loan payment, part of which is principal and part of which is interest, where if the borrower makes payment according to the loan's amortization schedule, the loan will be paid-off by the end of its set term. If the loan is a fixed-rate loan, each fully amortizing payment will be equal an amount. If the loan is an adjustable-rate loan, the fully amortizing payment may change as the interest rate on the loan changes.

INVESTOPEDIA EXPLAINS 'Fully Amortizing Payment'

These payments are often associated with payment option ARMs which offer the borrower four different monthly payment options: a 30-year fully amortizing payment, a 15-year fully amortizing payment, an interest-only payment, and a minimum payment.

On any loan product which allows the borrower to make payments which are less than the fully amortizing payment early in the life of the loan, subsequent fully amortizing payments later in the life of the loan will be equivalently increased to make the loan pay-off by the end of its originally scheduled term.

RELATED TERMS
  1. Amortization Schedule

    A complete schedule of periodic blended loan payments, showing ...
  2. Adjustable-Rate Mortgage - ARM

    A type of mortgage in which the interest rate paid on the outstanding ...
  3. Negative Amortization

    An increase in the principal balance of a loan caused by making ...
  4. Payment Option ARM

    A monthly adjusting adjustable-rate mortgage (ARM) which allows ...
  5. Negatively Amortizing Loan

    A loan with a payment structure that allows for a scheduled payment ...
  6. Self-Amortizing Loan

    A loan for which the periodic payments consist of both principal ...
Related Articles
  1. Choose Your Monthly Mortgage Payments
    Home & Auto

    Choose Your Monthly Mortgage Payments

  2. How Interest Rates Affect The Housing ...
    Economics

    How Interest Rates Affect The Housing ...

  3. Make A Risk-Based Mortgage Decision
    Options & Futures

    Make A Risk-Based Mortgage Decision

  4. Option ARMs: American Dream Or Mortgage ...
    Home & Auto

    Option ARMs: American Dream Or Mortgage ...

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center