Finance
A balloon mortgage in Rhode Island requires the borrower to:
AMake increasing monthly payments over the life of the loan
BPay off the remaining loan balance in a large lump sum at the end of a specified term✓ Correct
CMake interest-only payments for the full loan term
DRefinance the loan every three years
Explanation
A balloon mortgage requires regular (often interest-only or partially amortizing) payments for a set period, after which the entire remaining balance is due in a single large 'balloon' payment.
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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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