Question

a borrower paid extra each month to pay off a loan early but was charged an unexpected fee. what did the loan include?
balloon payment
consideration
prepayment penalty
equity fee
tina missed several mortgage payments on her home. she received a notice that the lender may take legal action to sell her house. what is this process called, and what is one possible consequence?
repossession; she may lose her car
foreclosure; she may lose her home and damage her credit score
garnishment; her wages will be withheld
bankruptcy; she is immediately debt-free

Explanation:

First Question:

• Balloon payment: A large final payment, not related to early payoff fees.
• Consideration: A legal term for value in a contract, not a fee for early loan payoff.
• Prepayment penalty: A fee charged when a loan is paid off early, matching the scenario.
• Equity fee: Not a standard term for early payoff charges.

• Repossession: Applies to vehicles, not homes.
• Foreclosure: The process where a lender takes legal action to sell a home after missed mortgage payments, leading to loss of home and credit damage.
• Garnishment: Involves wage withholding, not home sales.
• Bankruptcy: A legal process for debt relief, not specific to home loss from missed mortgage payments.

Answer:

C. Prepayment penalty

Second Question: