What does amoritization mean?

The manner in which payments are divided over the course of a loan's term. Amoritization is commonly considered the most straightforward repayment model because it provides for equal payments over the life of a loan, and each payment contains both a portion of the principal loan amount and interest.

Your loan documents will generally include an amortization schedule, which will indicate when payments are due and how much they are.

An amortization schedule will give you a clear sense of how big of a monthly obligation a given loan will be. When deciding how much to borrow, consider your ultimate monthly payment as well as how much of your monthly income it accounts for. Experts generally recommend a debt-to-income ratio of around 28% for housing expenses and 36% overall.