Finance
What is a balloon payment mortgage and what risk does it present to Nevada borrowers?
AA mortgage with gradually decreasing payments; it is always a safe option
BA mortgage with a large lump-sum payment due at the end of the term; the borrower must refinance or pay off the balance✓ Correct
CA mortgage with payments that increase over time
DA mortgage guaranteed by the Nevada Housing Division
Explanation
A balloon mortgage requires a large lump-sum payment at a set date (often 5 or 7 years). If the borrower cannot refinance or pay the balloon due to market conditions or credit issues (as occurred during Nevada's 2008–2012 housing crisis), they risk default and foreclosure.
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