Finance
A balloon mortgage in Oklahoma requires the borrower to:
AMake larger payments each month that balloon over time
BPay off the remaining balance in a large lump sum at the end of the term✓ Correct
CPay adjustable rates that increase annually
DRefinance every 5 years automatically
Explanation
A balloon mortgage features lower monthly payments for a set period, with the remaining principal balance due in full as a lump-sum 'balloon' payment at the end of the 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.
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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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