A Mortgage Loan Is an Example of an Amortizing Loan

question 52

True/False

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.

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Definitions:

Profits

The financial gain obtained when the revenue from business activities exceeds the expenses, taxes, and costs of operation.

Insolvent

A financial state in which an individual or entity cannot meet its debt obligations as they come due, or its liabilities exceed its assets.

Debt Payment

The act of paying back the principal and interest on borrowed money, typically according to a predetermined schedule.

Risk

The potential for losing something of value or the possibility of an adverse outcome.