Phil and Roweena are first time home buyers struggling to make ends meet. They enter into a mortgage with an interest rate of 4.25% for a term of 30 years. The mortgage is self amortizing, but the monthly payments for the first 3 years of the mortgage are lower than the required self amortizing payments. At the end of 3 years, though, the mortgage payments will increase so that they actually

exceed the required self amortizing payments to make up for the shortfall during the first 3 years of the mortgage. Roweena and Phil have most likely entered into a:

A. Graduated payment mortgage
B. Fixed rate mortgage
C. Balloon mortgage
D. Adjustable rate mortgage


A

Legal Studies & Paralegal

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