Paydown Factor

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DEFINITION of 'Paydown Factor'

The portion of cash subtracted each month from the principal of a mortgage security divided by the original principal of the security.

INVESTOPEDIA EXPLAINS 'Paydown Factor'

Security issuers are required by the GNMA to supply the paydown factor every month. This fraction can be used to compute the total principal repayments made to the security for specific periods.

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