What the Heck IS Amortization?

am·or·ti·za·tion

 noun 

\ˌa-mər-tə-ˈzā-shən also ə-ˌmȯr-\

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Amortization is the total time it will take to pay off your mortgage.  Traditionally, a mortgage begins with a 25 year amortization; however, over the last couple of years federal regulation has changed, allowing any number to be amortized, up to 30 years.

You must be aware that the longer the amortization:

a. The lower the payment

b. The higher the interest

c. The less paid off at the end of the term (typically 5 years) 

I recommend that the traditional 25 years is the best choice, except in one situation:

If you use 30 year amortization in the short term, and later take advantage of a pre-payment privilege by increasing the payment as much as possible each year, by increasing your payment you will decrease the amortization.  If you pay a little more per payment, you will pay off your mortgage rapidly.