A Florida real estate licensee is explaining amortization to clients. All of the following are true about loan amortization EXCEPT:
Correct Answer
D) Interest payments increase over the life of the loan
Correct: Interest payments DECREASE over the life of the loan, not increase, making D the exception. Option A is correct as early payments are mostly interest. Option B is correct as principal portions increase over time. Option C is correct for fixed-rate mortgages.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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