direct reduction mortgage

direct reduction mortgage

A mortgage loan in which at least a portion of each month's payment is used to reduce the principal balance of the loan—there is a direct reduction of the principal balance,resulting in next month's interest being smaller.When a borrower makes a fixed payment each month according to a fully amortizing loan schedule,the entire loan balance will eventually be paid by the anticipated maturity date.That is the most common type of direct reduction mortgage,but a wide variety of other options is possible.