Mortgage amortization simply means the reduction in the amount that is owed by the mortgagor. This reduction is the result of the periodic payments made by the mortgagor to the lender. The word amortization can be loosely defined as the slow “death” of a contract wherein the mortgagor is absolved and the contract fulfilled when the amortization is complete.

• When a mortgage contract begins, the lender or the bank decides on the amount and the number of periodic payments that are to be made. These payments should cover the interest and a part of the principal so that over a period of time the full amount of loan is paid off with interest. Amortization is just a scientific way of saying “paid-off” and simply means reduction of the sum that is owed.
• Even though amortization may appear to be uncomplicated, it can become intricate in some situations. A typical amortization contract starts off with smaller payments towards the principal and the majority of the amount going towards the interest. As more and more of the principal is paid off, the interest also decreases. However this may not be the case in some types of mortgages such as adjustable rate mortgages.
• Mortgage amortization and the amount paid as a result of it can be calculated by the borrower at the outset of the contract. This can be done by taking into consideration factors such as the interest that is to be paid, the length of the contract, the type of mortgage, and finally the feasibility of the same. Sometimes long term mortgages with high interest rates can drain a mortgagor or borrowers finances which would be undesirable.
• Some borrowers or mortgagors will attempt to amortize their contracts quickly by paying more than what is required. Such practices are sometimes accepted by the lender and some lenders forbid it. Many mortgagees even fine the borrower if he or she makes a bigger payment than what is stipulated in the contract; however, some lenders will allow this practice. All this has to be taken into consideration when getting into a mortgage contract.
• Mortgage amortization calculators are also available on the Internet that consider many factors when calculating the amortization amounts and process. Some of the factors that are taken into account by a mortgage calculator are – the loan amount, the annual interest rate, the number of months, desired amortization schedule (yearly/monthly), and other factors such as information about the financial aspect of the property.
• Mortgage amortization can also be done on an Excel sheet and there are companies that offer mortgage calculation software. Choosing these methods to calculate the feasibility of the contract is an excellent idea before you jump into any mortgage contract.

If you have any other points or facts to add about amortization; feel free to leave a comment.