What type of loan features a fixed interest rate and equal monthly payments throughout the life of the loan?

A fully amortized fixed-rate loan. Each payment covers both principal and interest, and the loan is completely paid off by the final payment.

What is a balloon payment loan?

A loan that requires a large lump-sum payment of the remaining principal balance at the end of a relatively short loan term, even though payments may be calculated on a longer amortization schedule.

What distinguishes a straight (term) loan from an amortized loan?

A straight loan requires interest-only payments during the loan term, with the entire principal due in one lump sum at maturity. An amortized loan gradually reduces principal with each payment.

What is a reverse mortgage, and who typically uses it?

A reverse mortgage allows homeowners aged 62 or older to convert home equity into cash without monthly mortgage payments. The loan is repaid when the borrower sells, moves out, or dies.

What is a package mortgage?

A package mortgage includes both real property and personal property (such as appliances and furniture) as collateral for a single loan.

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Finance & Loans – California Real Estate Salesperson Exam

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