Finance
A 'balloon mortgage' requires the borrower to:
AMake increasingly larger payments over the loan term
BPay off the remaining loan balance in a large lump sum at the end of a set period✓ Correct
CMake interest-only payments for the entire loan term
DRefinance the loan every 5 years
Explanation
A balloon mortgage features regular monthly payments (often interest-only or partially amortizing) for a set period, followed by a single large 'balloon' payment of the remaining balance. This type of loan carries refinancing risk at the end of the balloon period.
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