What does the term 'amortization' mean in a mortgage loan?

AMORTIZATION: The process of gradually paying off a loan through scheduled regular payments that include both PRINCIPAL and INTEREST, structured so the loan balance reaches ZERO by the end of the term. FULLY AMORTIZED LOAN: Each payment covers all the interest due plus some principal; early payments are mostly interest, later payments mostly principal (the ratio shifts over time); the balance is fully paid at maturity; AMORTIZATION SCHEDULE: Shows each payment's split between principal and interest and the declining balance; CONTRAST: INTEREST-ONLY loan (payments cover only interest, principal due at end); BALLOON loan (smaller payments with a large lump sum due at the end — not fully amortized); NEGATIVE AMORTIZATION (payments don't cover interest, balance grows); EQUITY builds as principal is paid down and (potentially) the property appreciates; amortization is a fundamental financing concept on the national exam — understanding that early payments are interest-heavy and the loan self-liquidates over the term is key.