Amortization Amortization means paying off a loan with regular payments over time, so that the amount you owe decreases with each payment. Amortization Chart An amortization chart shows how much of your payment is assigned month by month to the interest the lender is charging and how much goes to principal which creates equity for you. The amount that goes towards paying interest is larger than the amount going towards principal at the beginning of the term. The amount going towards interest will diminish each month while the amount going towards your equity will increase. Annual income Annual income is a factor in a mortgage loan application and generally refers to your total earned, pre-tax income over a year. Annual income may include income from full-time or part-time work, self-employment, tips, commissions, overtime, bonuses, or other sources. A lender will use information about your annual income and your existing monthly debts to determine if you have the ability to repay the loan. Whether a lender will rely upon a specific income source or amount when considering you for a loan will often depend upon whether you can reasonably expect the income to continue. Annual Percentage Rate (APR) An annual percentage rate (APR) is a broader measure of the cost of borrowing money than the interest rate. The APR reflects the interest rate, any points, mortgage broker fees, and other charges that you pay to get the loan. For that reason, your APR is usually higher than your interest rate. Bi-weekly payment In a bi-weekly payment plan, the mortgage servicer is collecting half of your monthly payment every two weeks,
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