According to e-AmortizationSchedule.com mortgage amortization is the reimbursement of principal from scheduled mortgage payments that exceed the interest due. The scheduled cost paid by the borrower less the interest equaling amortization. The loan balance declines by the amount of the amortization, plus the amount of any extra payment. Negative amortization occurs when the scheduled cost is less than the interest due whereby the balance goes up.
The Fully Amortizing cost on Frm and Arm:
Mortgage Amortization Schedules
The fully amortizing cost is the monthly mortgage cost that will ultimately pay off the loan at term. On a fixed rate mortgage (Frm), the fully amortizing cost is calculated at the outset and remains constant over the life of the loan. On the other hand, on an adjustable rate mortgage or Arm, the fully amortizing cost is constant only when the interest rate remains constant. The fully amortizing cost changes only when the rate changes.
