Virginia State Real Estate Exam Practice Question
An advantage of a partially amortized or balloon payment loan is that
Correct Answer: C
Rationale: Partially amortized or balloon payment loans feature smaller monthly payments, which is a key advantage for borrowers seeking lower short-term financial obligations. This structure allows borrowers to manage cash flow effectively.
Option A is incorrect; in these loans, the interest portion does not increase over time; rather, it remains consistent until the balloon payment is due. Option B is misleading, as a balloon payment means that a significant amount of principal is due at the end of the term. Option D is not a typical characteristic of balloon loans, as they do not inherently offer extensions at prevailing rates; this depends on lender policies.
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