What is the effect of lengthening an amortization period for a borrower?

Lengthening an amortization period primarily affects the monthly payments and the total interest paid over the life of the loan. When the amortization period is extended, the borrower benefits from reduced monthly payments because the total amount of principal and interest is spread over a longer time frame. This makes it more manageable for borrowers who may be budget-conscious or looking to free up cash flow for other expenses.

However, while the monthly payments decrease, this extension also results in an increase in overall interest charges. This happens because the borrower is taking longer to pay off the principal balance, leading to more interest accumulating over the extended duration of the loan. As interest is often calculated based on the outstanding principal, the borrower ends up paying interest for a longer period, which compounds the total amount paid by the end of the loan term.

In summary, lengthening the amortization period effectively decreases monthly payments while simultaneously increasing the total interest burden over the life of the mortgage.