Finance
In Michigan, an 'interest-only loan' means the borrower:
APays only principal each month
BPays only the interest accrued each month, with no reduction in principal balance during the interest-only period✓ Correct
CHas no monthly payment obligation
DPays interest and principal on a graduated schedule
Explanation
With an interest-only loan, the borrower's monthly payments cover only the interest that accrues; the principal balance does not decrease during the interest-only period. At the end of that period, the payment increases significantly or a balloon payment becomes due.
Related Michigan Finance Questions
- In Michigan, the Truth-in-Lending Act (TILA) requires lenders to disclose the loan's:
- A Michigan buyer's 'good faith estimate' of closing costs under TRID is found in the:
- In Michigan, 'mortgage impound accounts' benefit lenders because they:
- In Michigan, a 'deficiency judgment' in foreclosure occurs when:
- In Michigan, a mortgage lien is created when:
- In Michigan, the 'Good Faith Estimate' (now replaced by the Loan Estimate) was/is required under:
- The Federal Reserve's decision to raise the federal funds rate typically causes mortgage interest rates to:
- In Michigan, a 'construction loan' differs from a permanent mortgage because it:
Practice More Michigan Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Michigan Quiz →