The process of paying off a loan through specifically structured periodic payments is known as amortization. Amortized loans are different from other loans due to the way the amount and the structure of each payment is determined.

Mortgage payments are a common form of amortized loans, and interestingly enough, both the term mortgage and the term amortization find their meaning in the same root word "mort." This term means to deaden or kill, as in to "kill off" or eliminate the loan a bit at a time, via regular payments.

Regarding home loans, payments are usually the same amount each month with a fixed interest rate. In some cases, the last payment may be a bit more or a bit less than payments made throughout the life of the loan.

To learn if you can afford the the payments on the home of your dreams, visit a real estate company, investment firm, or mortgage lender's website. Several offer simple to use amortization calculators.

Amortized payments are calculated by dividing the principal - the balance of the amount loaned after down payment - by the number of months allotted for repayment. Next, interest is added. Interest is calculated at the current rate according to the length of the loan, usually 15, 20, or 30 years. Each payment eliminates a percentage of the interest first, and then a portion of the principal