General Mortgage KnowledgeQuestion 117 of 400
A balloon mortgage is best described by which feature?
a.A large lump-sum payment is due at the end of the term
b.The rate adjusts every year
c.Payments are interest-only for 30 years
d.No payments are due until sale
Explanation
A balloon loan has smaller periodic payments but requires a large lump-sum payoff (the balloon) at maturity. Annual adjustment describes an ARM, and the other options describe interest-only and reverse-mortgage features.
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