Accredited Mortgage Professional (AMP) Practice Exam

Question: 1 / 400

What does a mortgage's amortization schedule indicate?

The timeline for property appreciation

The breakdown of payments into principal and interest over time

The amortization schedule provides a detailed breakdown of each payment made on a mortgage loan throughout its term. Specifically, it shows how much of each payment goes towards paying down the principal balance of the loan and how much goes towards the interest. This schedule is crucial for borrowers to understand because it highlights how the balance of the loan decreases over time and reveals how the interest component of their payments changes as the principal is paid down. As the borrower continues making payments, the portion allocated to interest declines while the portion going towards the principal increases, ultimately leading to the loan being fully paid off at the end of the term. This understanding can help borrowers plan their finances more effectively, making option B the correct answer.

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The total interest a borrower will pay over the life of the loan

The amount of down payment required

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