California Real Estate Practice Exam

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Study for the California Real Estate Exam. Engage with multiple choice questions and detailed explanations to sharpen your knowledge. Get ready to ace your real estate career!

Practice this question and more.

Which type of mortgage loan has a monthly payment that remains unchanged for the life of the loan?

Adjustable rate
Interest-only
Balloon mortgage
Fixed rate; fully amortized

The correct answer is: Fixed rate; fully amortized

Fixed rate; fully amortized mortgages have a monthly payment that remains unchanged for the entire duration of the loan. This is because the interest rate and loan term are fixed, so the amount paid towards both the principal and interest remains the same each month. The other options are incorrect because - Adjustable rate mortgages have a fluctuating interest rate, which results in a fluctuating monthly payment. - Interest-only mortgages only require the borrower to pay the interest each month, so the payment towards the principal may vary. - Balloon mortgages have a fixed interest rate, but the remaining balance must be paid in a lump sum at the end of the loan term, resulting in a drastically different monthly payment.