Finance
A Florida mortgage that requires the borrower to make no payments during the loan term, with the entire balance due (principal + interest) at maturity, is called a:
ABalloon mortgage
BTerm mortgage (interest-free or straight-term note)✓ Correct
COpen-end mortgage
DBlanket mortgage
Explanation
A term mortgage (also called a straight note) requires no principal payments during the loan term; the entire principal (and potentially interest) is due in a lump sum at maturity. This was common in early real estate financing.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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