In real estate, a **mortgage** is a loan from a lender that is paid off with an interest rate
over a period of time. Some of the most commonly used terminology for mortgages is discussed below.

**Amortization** is process of paying off a mortgage over time through regular
payments.
*Learn more » What is Amortization?*

A **amortization schedule** is a table or chart showing each payment on an amortizing loan,
including how much of each payment is interest and the amount going towards the principal balance.
They are also commonly referred to as **amortization charts**.

The **principal** is the amount of money borrowed in the mortgage loan. The
**interest rate** (or annual interest rate) is used to determine how much money is paid back to the lender
in each payment period. The **term** is the length of a loan usually measured in
years or months.

A **fixed rate mortgage** is where the interest rate remains the same throughout the
entire term.

The opposite of a fixed rate mortgage is an **adjustable rate mortgage (ARM)**.
This is where the interest rate may be adjusted over the duration of the loan.
The length of time between each rate change is called the adjustment period. So a 5-year ARM indicates that the
interest rate of the loan can change after 5 years.

The **annual percentage rate** is the regular interest rate plus any
additional financial charges, such as closing costs or other
fees, that are expressed as part of the total interest rate.

A **scheduled payment** is the amount of money the person must pay back to the
lender each month, year, or other time interval. The payment often includes a portion
that goes towards interest while the rest is used to pay off the remaining balance of the mortgage loan.

**Default** occurs when a debtor is unable to pay back a loan either
from missing scheduled payments or violating a condition of the loan.