What does amortization refer to in real estate?

Amortization in real estate specifically refers to the process of gradually paying off a debt over a set period of time through regular payments. This method involves making consistent payments that typically cover both interest and a portion of the principal balance, which gradually reduces the amount owed on a loan.

In the context of real estate, amortization often applies to mortgage loans where the borrower repays the amount borrowed, plus interest, over a period such as 15 or 30 years. Understanding amortization is crucial for both buyers and real estate professionals, as it affects budgeting, overall loan costs, and the long-term financial implications involved in property ownership.

The other aspects mentioned in the question focus on different concepts: income generation pertains to cash flow from a property, property tax division relates to taxation practices, and property evaluation involves assessing value over time, none of which accurately describe the principle of amortization.