">Amortization

This refers to the amount of time it takes to repay a mortgage in full.

For example, a mortgage with an amortization period of 25 years will be fully paid off in its 25th year, assuming the payments are made on time and that no extra payments are made.

Spy Tip: If you have inconsistent income, unsecured higher-interest debt or a better use of your discretionary cash flow, you may want to set your amortization as long as possible. That gives you more payment flexibility. With standard mortgages, you can always increase your payments or make prepayments after closing to reduce your effective amortization later.

See also: Mortgage Term