PSI Virginia Real Estate Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the PSI Virginia Real Estate Exam with comprehensive quizzes. Study using flashcards and multiple-choice questions, complete with hints and explanations. Ace your exam with confidence!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What is an amortized loan?

A loan paid off in equal installments
A loan with fluctuating interest rates
A loan that requires a balloon payment at the end
A type of loan available only for commercial properties

The correct answer is: A loan paid off in equal installments

An amortized loan is characterized by being repaid in equal installments over a specified period. Each payment typically covers both principal and interest, allowing the borrower to gradually reduce their debt over time. This structured repayment plan makes it easier for borrowers to budget their finances, since they know exactly how much they need to pay each month. In contrast, loans with fluctuating interest rates, those requiring a balloon payment, or loans exclusive to commercial properties do not fit the distinct nature of an amortized loan. These types may have varying payment structures or requirements that do not provide the borrower with the predictability and steady repayment that an amortized loan offers. Understanding the mechanics of amortized loans is essential for recognizing their benefits, such as building equity and establishing a clear timeline for debt repayment.