What is Amortization?
Table of contents
Amortization in Relation to HUD 223(f) Loans
Amortizing loans are loans in which part of each payment goes toward interest and part goes toward paying off the principal. In most cases, the the bulk of early monthly payments go toward interest, while the bulk of the later payments go toward the principal. HUD 223(f) loans are fully amortizing, which means that the loan’s principal will be fully paid off by the end of the loan’s term.
HUD 223(f) Amortization in Comparison to Other Types of Multifamily Financing
While all HUD multifamily loans are fully amortizing, many other types of multifamily acquisition and refinancing loans, such as CMBS loans or certain Fannie Mae® and Freddie Mac® multifamily loans are partially amortizing. This means that the borrower will have to face a large balloon payment or refinance the loan before the term is up.