Mortgage Terms & Amortization

The term is the period your current mortgage contract and interest-rate arrangement are in effect. At the end of the term, you usually renew, pay out or switch the mortgage.

Amortization is the total scheduled period over which the mortgage would be repaid if the agreed payment schedule and interest assumptions continued. A longer amortization generally lowers the payment but increases total interest over time.

A 30-year amortization normally results in a lower scheduled payment than a 25-year amortization on the same mortgage, but more interest is typically paid over the life of the loan. Eligibility for 30-year amortization depends on the mortgage program.

Many mortgages include prepayment privileges such as lump-sum payments or increased regular payments. Limits and rules vary by lender, so these features should be reviewed before choosing a product.

Possibly, but extending the amortization may require refinancing or lender approval and can affect qualification, interest cost and mortgage-insurance treatment. It should be reviewed as part of the full financial picture.