Finance
A Washington commercial loan has a 20-year amortization but requires a balloon payment at year 7. This means:
AThe loan is fully paid off in 7 years
BMonthly payments are calculated on a 20-year schedule but the entire remaining balance is due at the end of year 7✓ Correct
CThe interest rate adjusts after year 7
DOnly commercial borrowers with perfect credit qualify
Explanation
A balloon loan has monthly payments calculated on the longer amortization schedule (creating lower payments) but requires the entire remaining balance (balloon payment) to be paid at the end of the shorter term (year 7). The borrower must either refinance or pay off the balloon.
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