Daniel is due to receive the balance of his trust fund in 5 years; as a result he has taken out a ________ mortgage where he has made small payments for several years and will pay off the balance in one large payment with his trust funds.

Question

Quizplus · Accepted Answer

The type of mortgage described in the scenario is a balloon payment mortgage. This is because the borrower makes small payments over a certain period of time and then makes one large payment (balloon payment) to pay off the remaining balance. The other options, such as ARM, graduated payment, shared appreciation, and fixed rate mortgages, do not fit the scenario described.

Daniel Is Due to Receive the Balance of His Trust