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Buyer A promises to pay off all the interest on the loan he used to buy the property in monthly installments and pay off the principal with the last payment of interest. He most likely signed a(n)____________

User Bobblez
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Final answer:

A borrower repaying interest monthly and the principal at the end of the loan term likely has a balloon loan. This loan type requires interest-only payments followed by a lump sum principal payment .

Step-by-step explanation:

Buyer A, who promises to pay off all the interest on a loan in monthly installments and to pay off the principal with the last payment, most likely signed a balloon loan agreement.

This type of loan involves making regular payments of only interest, with the entire principal amount due as a lump sum at the end of the term.

A balloon loan can be beneficial for borrowers who expect to have funds to cover the large final payment or plan to refinance prior to the maturity date of the loan.

User Snels Nick
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