Amortization

Amortization (or amortisation) is the process of decreasing, or accounting for, an amount over a period. The word comes from Middle English amortisen to kill, alienate in mortmain, from Anglo-French amorteser, alteration of amortir, from Vulgar Latin admortire to kill, from Latin ad- + mort-, mors death.

When used in the context of a home purchase, amortization is the process by which loan principal decreases over the life of a loan. With each mortgage payment that is made, a portion of the payment is applied towards reducing the principal, and another portion of the payment is applied towards paying the interest on the loan. An amortization table shows this ratio of principal and interest and demonstrates how a loan's principal amount decreases over time.

Amortization is generally known as depreciation of intangible assets of a firm.

Read more about AmortizationApplications of Amortization

Other articles related to "amortization":

Applications of Amortization
... Amortization (business), the allocation of a lump sum amount to different time periods, particularly for loans and other forms of finance, including related interest or other finance charges ... Amortization schedule, a table detailing each periodic payment on a loan (typically a mortgage), as generated by an amortization calculator ... Negative amortization, an amortization schedule where the loan amount actually increases through not paying the full interest Amortized analysis, analyzing the execution cost of algorithms over a sequence of ...
Selig V. United States
... for the Seventh Circuit related to the amortization of intangible property ... Conceptually, amortization is a mechanism that allows taxpayers to recover the cost of property over the life of an asset when they are precluded from taking an immediate and full ... There are two forms of such recovery depreciation and amortization ...
Tax Increase Prevention And Reconciliation Act Of 2005 - Excerpts From Detailed Summary of Conference Report - Revenue Offset Provisions - Amortization of Geological and Geophysical Expenditures For Major Integrated Oil & Gas Companies
... The provision replaces two-year amortization treatment for certain expenditures made by major integrated oil companies with five-year amortization treatment ...
Amortizing Loan
... is paid down over the life of the loan (that is, amortized) according to some amortization schedule, typically through equal payments ... the time value of money formulas, and can be done using an amortization calculator ... An accumulated amortization loan represents the amount of amortization expense that has been claimed since the acquisition of the asset ...
Amortization (tax Law)
... In tax law, amortization refers to the cost recovery system for intangible property ... Although the theory behind cost recovery deductions of amortization is to deduct from basis in a systematic manner over an asset's estimated useful ...