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A borrower compares a conventional mortgage and an interest-only mortgage. The interest-only loan carries a higher interest rate. What is the most likely reason?

A lender requires a borrower seeking an interest-only mortgage to make a larger down payment than would be required for a conventional loan. Why?

A borrower has a variable-rate interest-only mortgage. The benchmark interest rate rises significantly. What is the most likely outcome?

A borrower wants greater certainty regarding future payments on an interest-only mortgage. Which loan feature may help reduce uncertainty?

A borrower makes only the required interest-only payment every month and does not make any extra principal payments. What happens to the loan balance during the interest-only period?

A borrower notices that the monthly payment on an interest-only mortgage decreased after the lender lowered the interest rate. Why did the payment decrease?

A borrower purchases a $350,000 home, makes a $150,000 down payment, and obtains a $200,000 interest-only mortgage at 7%. During the interest-only period, which event could cause the monthly payment to change?

A borrower compares a conventional fixed-rate mortgage with an interest-only mortgage. Which statement accurately describes a conventional loan?

A borrower receives a large bonus and applies it directly toward principal during the interest-only period. What effect may result?

A borrower reaches the end of a 10-year interest-only period on a 30-year mortgage. What is the most likely result?