Which of the following characteristics applies to the amortization of a loan such as a home mortgage?
A) The amortization decreases with each payment.
B) The amortization increases with each payment.
C) The amortization is constant throughout the loan.
D) The amortization fluctuates monthly with changes in interest rates.

Question

Quizplus · Accepted Answer

In a typical amortizing loan, such as a home mortgage, the portion of the payment that goes towards the principal (amortization) increases with each payment, while the portion that goes towards interest decreases.

Which of the Following Characteristics Applies to the Amortization of a Loan