In real estate, what does the term "amortization" specifically refer to?

The term "amortization" specifically refers to the process of gradually paying off a loan through scheduled payments over a set period. Each payment typically covers both the interest and a portion of the principal balance, leading to a decrease in the amount owed over time. This method is commonly used in real estate financing, particularly for mortgages, allowing borrowers to predict their monthly expenses and systematically reduce their debt.

In context, options related to investment returns, rental price assessments, or neighborhood evaluations do not apply to the concept of amortization. Those areas focus on different aspects of real estate, such as financial metrics and market analysis, rather than the structured repayment of a loan.