Amortization Type Questions And Answers Guaranteed Pass.
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Course
AMORTIZATION
Institution
AMORTIZATION
fully amortizing loan - correct answer fully repaid at maturity by periodic reduction
of the principal. When a loan is fully amortized, the payments the
borrower makes are equal over the duration of the loan. Any mortgage
other than a 30-year, fully amorti...
fully amortizing loan - correct answer fully repaid at maturity by periodic reduction
of the principal. When a loan is fully amortized, the payments the
borrower makes are equal over the duration of the loan. Any mortgage
other than a 30-year, fully amortizing, fixed-rate mortgage is a
nontraditional mortgage.
partially amortizing loan - correct answer a repayment schedule that is not
sufficient to pay off the loan over its term. This type of loan calls for
regular, periodic payments of principal and interest for a specified period
of time. At maturity, the remaining unpaid principal balance is due as a
balloon payment. A balloon payment is substantially larger than any
other payment and repays the debt in full.
straight loan - correct answer is not amortized. The borrower only makes periodic
interest payments during the term of the loan. The entire principal balance is due in one lump sum upon
maturity. These loans are also called
interest-only loans. This type of loan is not commonly offered by institutional lenders but may be offered
by a seller or a private lender to a buyer.
Loan products differ based on the terms of the loan - correct answer which include
the amount borrowed, interest rate, length of the loan, and amortization type. Amortization type is the
basis for how a loan will be repaid. The type of amortization influences changes in repayment terms
during the life of the loan. The most common amortization types include fixed-rate loans, adjustable-
rate mortgages (ARM), and graduated payment mortgages
(GPM)
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