Finance
An interest-only mortgage requires the borrower to pay:
APrincipal and interest equally
BOnly the interest portion, with the full principal due at term end (or at conversion)✓ Correct
CExtra principal with every payment
DOnly escrow for taxes and insurance
Explanation
An interest-only loan requires payments of only the interest on the outstanding principal. No principal reduction occurs during the interest-only period. The full principal balance must be paid at the end of the term, at refinance, or when the loan converts to fully amortizing.
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