A mortgage loan is an example of an amortizing loan."Amortizing" means that part of the monthly payment is used to pay interest on the loan and part is used to reduce the amount of the loan.

Question

Quizplus · Accepted Answer

This is correct, as a mortgage loan typically involves regular payments made over time that gradually reduce the principal balance of the loan. Each payment includes both principal and interest, with a larger portion of the payment going toward interest at the start of the loan and a larger portion going toward the principal balance over time. This process is known as amortization.

A Mortgage Loan Is an Example of an Amortizing Loan