Which loan is described as the limited reduction loan for a renegotiable rate mortgage, with payments that typically do not fully amortize by the end of the term?

• A. Open end loan
• B. Partially amortized loan
• C. Graduate payment mortgage
• D. Buy downs

Answer: (B)

Partially amortized loans reduce the debt over time, but the scheduled payments don’t fully pay the balance by the end of the term, leaving a balloon payment due at maturity. This setup often accompanies renegotiable-rate mortgages, where payments are structured to be lower initially while a large lump sum remains at the end unless refinanced. The other options don’t describe this pattern: an open-end loan is a revolving line of credit with no fixed payoff, a graduate payment mortgage features payments that start low and rise over time without a built-in balloon, and buy downs involve paying points up front to lower the interest rate rather than creating a loan with limited amortization.