If Properly Constructed,and Assuming Everything but the Structure of the Interest

question 37

Multiple Choice

If properly constructed,and assuming everything but the structure of the interest payment is equal,which of the following loans would typically have the highest first-year debt service?

• A)Accrual loan
• B)Conventional loan
• C)Interest only loan
• D)Participation loan

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Definitions:

Life Estate

A type of property ownership or interest that lasts for the lifetime of the individual holding it, after which it passes to another designated party.

Life Tenant

A Life Tenant is an individual who has the right to use and benefit from a property during their lifetime, but does not have the right to transfer ownership.

Permanently Injure

To cause harm or damage to someone or something that is lasting and not expected to fully recover.

Joint Tenants

Joint Tenancy is a form of co-ownership where property is owned by two or more parties with equal rights and upon the death of one, the property automatically passes to the surviving joint tenant(s).