Direct answer
What does Amortization mean?
Repayment of debt through scheduled payments that reduce principal over time.
Exam cue: Distinguish a fully amortizing loan from partial amortization, interest-only payments and a balloon payment.
What does it look like in a question?
New York example
Each monthly payment covers interest and applies the remaining scheduled amount to principal.
Common exam trap
What should you not confuse it with?
Amortization describes the repayment pattern, not appreciation of the property.
Related real estate finance terms
Balloon paymentA final payment that is substantially larger than the preceding scheduled payments.Debt serviceThe scheduled principal and interest payments required on debt for a stated period.EquityThe owner's value in property after subtracting liens from the property's value for the calculation being used.ForeclosureThe legal process used to enforce a mortgage lien after default and subject the property to sale or another court-ordered remedy.Loan-to-value ratioThe loan amount expressed as a percentage of the applicable property value or price.MortgageA security instrument that creates a lien on real property to secure repayment of a debt.
Sources used3 references with section locators
The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.
- Real Estate Salesperson 77-Hour CurriculumNew York State Department of StateSupports: Exam scopeSection: Subject 5, Real Estate Finance
- Real Estate License Law, March 2026New York State Department of StateSupports: DefinitionSection: Department of State reference glossary entry for Amortization
- Mortgage Key TermsConsumer Financial Protection BureauSupports: DefinitionSection: Amortization
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