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Questions and Answers
What happens to any amount paid beyond the minimum monthly debt service on an amortizing loan?
What happens to any amount paid beyond the minimum monthly debt service on an amortizing loan?
- It goes toward paying interest only
- It goes toward a borrower's savings account
- It goes toward paying down the loan principal (correct)
- It is refunded to the borrower
In an amortized loan, how are the monthly payments split?
In an amortized loan, how are the monthly payments split?
- Between maintenance fees and utilities
- Between interest and the loan principal (correct)
- Between insurance and taxes
- Between principal and escrow
What is a common characteristic of unamortized loans?
What is a common characteristic of unamortized loans?
- Higher monthly payments compared to amortized loans
- No need for final repayment
- Balloon payment at the beginning of the loan term
- Interest-only payments during the loan period (correct)
How can a borrower pay off a balloon payment in an unamortized loan?
How can a borrower pay off a balloon payment in an unamortized loan?
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What is the purpose of a loan amortization schedule?
What is the purpose of a loan amortization schedule?
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