West Virginia Mortgage Law Practice Test 2026 - Free Mortgage Law Practice Questions and Study Guide

Question: 1 / 400

What is a balloon mortgage?

A mortgage that requires uniform payments throughout its term

A mortgage with an adjustable interest rate

A mortgage that requires a larger final payment after smaller regular payments

A balloon mortgage is characterized by a structure where the borrower makes smaller regular payments over a specified term, but at the end of that term, a significantly larger final payment, known as the "balloon payment," is due. This type of mortgage is often structured to keep initial payments lower, which can be appealing to borrowers who may expect to sell the property or refinance before the balloon payment comes due. This unique payment structure distinguishes balloon mortgages from traditional fixed-rate mortgages, which typically involve consistent payments throughout the loan term.

The appeal of this mortgage type is usually linked to its lower initial monthly payments, but it also carries risks, especially if the borrower is not prepared for the large final payment. Understanding how balloon mortgages work is crucial for potential borrowers as it can help them plan better for future financial commitments.

Get further explanation with Examzify DeepDiveBeta

A type of mortgage with no monthly payments

Next Question

Report this question

Download West Virginia Mortgage Law Practice Test PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy