California Real Estate Practice Exam

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What is the process called when a mortgage loan is paid off in equal payments consisting of principal and interest?

Refinancing
Amortization
Appreciation
Depreciation

The correct answer is: Amortization

Amortization is the process of paying off a mortgage loan in equal payments consisting of both principal and interest. A is incorrect because refinancing is the process of replacing an existing mortgage with a new one. C and D are also incorrect as they refer to changes in property value, rather than the process of paying off a mortgage loan.