Fully Amortizing Payment


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.

BREAKING DOWN '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.

  1. Amortization Schedule

    A complete schedule of periodic blended loan payments, showing ...
  2. Negatively Amortizing Loan

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

    A loan for which the periodic payments consist of both principal ...
  4. Payment Option ARM

    A monthly adjusting adjustable-rate mortgage (ARM) which allows ...
  5. Negative Amortization

    An increase in the principal balance of a loan caused by making ...
  6. Adjustable-Rate Mortgage - ARM

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