Finance
In Ohio, which type of mortgage allows the borrower to pay only interest for a specified period, after which payments increase to include principal?
AFully amortizing fixed-rate mortgage
BInterest-only mortgage✓ Correct
CReverse mortgage
DFHA streamline mortgage
Explanation
An interest-only mortgage requires only interest payments for an initial period. Afterward, payments increase to amortize the remaining principal over the remaining loan term.
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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.
Math Concepts
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