Finance
An interest-only mortgage requires the borrower to:
APay only principal for the first years, then interest-only
BPay only interest for a set period, with no reduction in the principal balance✓ Correct
CPay interest and taxes only, with no principal payment
DPay interest and PMI but no principal
Explanation
An interest-only mortgage requires the borrower to pay only interest for a specified period (often 5-10 years). The principal balance does not decrease during this period.
People Also Study
Related Tennessee Questions
- A property is financed with a $150,000 loan at 7% annual interest for 30 years. The monthly P&I payment is $997.95. After the first payment, approximately how much of the payment goes to principal?Real Estate Math
- A Tennessee investor finances $180,000 at 7% annual interest with monthly payments of $1,198. After the first payment, what is the remaining loan balance (approximately)?Real Estate Math
- A Tennessee homeowner's mortgage payment is $1,450/month including taxes and insurance. If taxes are $2,400/year and insurance is $1,200/year, what is the monthly principal and interest payment?Finance
- A 30-year loan of $150,000 at 6% has a monthly P&I payment of $899.33. After 10 years, approximately what percentage of each payment is principal?Real Estate Math
- A Tennessee borrower takes out a $180,000 mortgage at 6.5% interest. What is the first month's interest payment?Finance
- A Tennessee lender offers a 30-year fixed mortgage at 6.75%. The monthly payment on a $200,000 loan is approximately $1,297. After 12 months, approximately how much principal has been paid?Finance
- In Tennessee, an 'interest-only' mortgage requires the borrower to pay:Finance
- A Tennessee lender requires a maximum 28% housing ratio. A borrower's gross monthly income is $6,500. What is the maximum monthly PITI payment?Real Estate Math
Key Terms to Know
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.
AmortizationThe 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.
Study This Topic
Practice More Tennessee Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Tennessee Quiz →