Which statement best describes amortization in a standard fixed-rate mortgage?
Correct Answer
B) Regular payments reduce the loan balance over time until it reaches zero at the end of the term
Amortization means the borrower makes regular payments over time and the balance gradually falls until the debt is fully paid by the end of the stated term. In a standard fixed-rate mortgage, each payment includes interest and some principal reduction, and the outstanding balance declines month by month.
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