National Appraiser Exam 2025 – 400 Free Practice Questions to Pass the Exam

A key difference between fully amortized and partially amortized loans is that fully amortized loans conclude entirely with regular payments. In a fully amortized loan, the borrower pays equal installments of both principal and interest over the term of the loan. By the end of the loan term, the balance is reduced to zero, and the borrower does not owe any remaining amount. This predictability in repayment schedule ensures that the loan is completely paid off without any additional or balloon payment due at the end.

In contrast, partially amortized loans do not fully pay down the principal by the end of the loan term, resulting in a remaining balance known as a "balloon payment" that must be paid off at maturity. This can create financial challenges for the borrower who may not have planned for this lump-sum payment.

The other choices provided do not accurately represent the characteristics of these loan types as clearly as the correct choice does. For instance, though partially amortized loans may have higher monthly payments compared to some fully amortized loans, this isn't a defining difference. Additionally, fully amortized loans do not typically require balloon payments, as their structure is designed to complete repayment through regular payments. Regarding fixed interest rates, both loan types can potentially offer fixed rates,