5
QuizMultiple Choice

Mortgages and Home Ownership

Question 5 • TX-Personal Financial Literacy and Economics

A balloon payment mortgage makes the best sense for borrowers who are

Answer
A
fearful of taking risks when borrowing money.
B
planning on selling their homes before the term of the loan ends.
C
looking to avoid borrowing money from banks.
D
anticipating losing their jobs in the next few years.

Explanation

A balloon mortgage usually has relatively small payments for a set period, followed by one large final payment of the remaining balance. It makes the most sense for borrowers who expect to sell their homes before that payment comes due, so they can use the sale proceeds to repay the loan. The other choices describe situations where a large final payment would be especially risky.

AI-written and checked against the verified answer.

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