Which of the following is FALSE regarding interest only loans?
A)They usually have balloon payments
B)They have greater amortization than conventional loans
C)They may result in more cash flow to the investor
D)They may allow for a lower DCR

Question

Quizplus · Accepted Answer

Interest only loans have lower or no amortization, which means the borrower only pays the interest on the loan, and not the principal. This results in lower monthly payments but also means that the principal balance doesn't decrease over time. Therefore, statement B is false as interest only loans have lower amortization than conventional loans.

Which of the Following Is FALSE Regarding Interest Only Loans