However, the buyer needs to pay back the
loan over a period of time
s/he will pay an additional amount over
the required interest payment to reduce
the principal amount to zero.
There is a mathematical formula that constructs an amortization schedule that shows what monthly
dollar amount the buyer must pay in order to
reduce the loan to zero over a certain
period of time; i.e., 30 years.
All amortization schedules use a term: the most common term for home mortgages is 30 years (360
months). But other mortgage terms may include 15,
20 and 25 years.
There are even 40- and 50-year mortgage terms in some markets.