When is a mortgage considered fully amortized?

A mortgage is considered fully amortized when the loan balance is zero at the end of the term. This means that throughout the life of the loan, the borrower has made regular payments of principal and interest that gradually reduce the outstanding balance to zero. The amortization schedule typically details each payment's breakdown into interest and principal, ensuring that by the conclusion of the loan term, the borrower has fully repaid the loan amount without any remaining debt.

Full amortization is significant in real estate finance as it allows both the lender and the borrower to have a clear understanding of the payment schedule and the timing of when the loan will be completely paid off. This structured repayment process helps borrowers avoid balloon payments at the end of the term, which can occur in loans that are not fully amortized. In contrast, other scenarios described in the options do not result in a fully amortized mortgage, as they either involve only interest payments or depend on actions like selling the property without addressing the loan balance.