Finance
A 'balloon mortgage' in Georgia is characterized by:
AA. Monthly payments that increase gradually over the loan term
BB. A final payment significantly larger than regular payments, typically due at the end of a short term✓ Correct
CC. An interest rate tied to inflation indices
DD. No principal payments for the first five years
Explanation
A balloon mortgage has regular (usually low) monthly payments for a set period, then a large 'balloon' payment of the remaining balance due at maturity. Borrowers must pay off or refinance when the balloon comes due.
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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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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.
Math Concepts
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