Finance
In Wyoming, a balloon payment mortgage means:
AThe payment amount increases with inflation
BPayments are based on a longer amortization but the entire remaining balance is due at a specific date✓ Correct
CThe loan has no set repayment schedule
DThe interest rate adjusts monthly
Explanation
A balloon payment mortgage has regular periodic payments (often calculated on a 30-year amortization) but the remaining balance becomes due in full at a specific date—often 5, 7, or 10 years. Borrowers must then refinance, sell, or pay the 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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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