What is Amortization?
Answer:
Amortization is the process of spreading out
the payments on a large purchase, such as for a mortgage or vehicle, over a fixed period of time.  It almost always includes an interest amount based on a percentage of the principal, another word for the original purchase price minus any down payments.

Anyone who has ever taken out a mortgage loan has experience with amortization, whether they realize it or not.  You are able to pay off a large debt in installments rather than one lump sump and in most cases can count on a fixed payment for the life of the loan. The value of amortization is that borrowers can space payments over several years or even decades, and as a result, are able to purchase goods and property they might not otherwise be able to afford if they were required to pay the entire amount up front.
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