What is the term for the process by which a mortgage loan is repaid through equal payments of principal and interest?

Amortization is the term used to describe the process where a mortgage loan is repaid through equal payments that cover both principal and interest over a specified period. This method allows borrowers to gradually decrease the outstanding balance of the loan while also covering interest costs, leading to a predictable payment schedule. Each payment contributes to both reducing the loan's principal amount and paying the interest accrued on the remaining balance.

This process is particularly valuable in real estate, as it provides clarity for borrowers regarding their financial obligations each month. It benefits both lenders and borrowers by ensuring that the loan will be paid off in full by the end of the term, assuming all payments are made as scheduled.

Refinancing refers to replacing an existing loan with a new one, typically to secure a lower interest rate or modify loan terms. Loan structuring encompasses the overall framework of the loan, including its terms and repayment schedules, but does not specifically denote the act of repaying through equal payments. Debt reduction generally refers to strategies for decreasing the total amount owed but does not specifically relate to the structure of loan repayment itself.