Finance
What is a 'balloon payment mortgage' and what risk does it pose for Idaho borrowers?
AA mortgage with increasing payments; risk is the inability to make higher payments
BA mortgage with relatively small regular payments and a large lump-sum payment due at maturity; risk is the borrower may be unable to refinance or pay the balloon when it comes due✓ Correct
CA government-backed loan for rural properties
DA mortgage with no down payment requirement
Explanation
A balloon mortgage has regular amortizing payments (often based on a 30-year schedule) but matures and requires full payoff after a shorter term (typically 5-7 years). The balloon risk is that when due, the borrower must either pay the large remaining balance or refinance — which may not be possible if credit markets tighten or property values decline.
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