Which type of loan pays off the entire balance of principal and interest due at the end of the term?

The correct answer is amortizing. An amortizing loan involves a repayment structure where the borrower pays off both the principal and interest over the life of the loan through regular payments. However, in this specific context where the question asks about paying off the entire balance at the end of the term, it typically refers to a balloon loan or a different structure; it is necessary to clarify that while amortizing loans may include full repayment schedules, they usually cover the total amount over the term.

In contrast, the other options do not refer to a loan type that encompasses this payment structure:

• Annualized loans typically calculate the interest expressed on a yearly basis, which may not convey how or when the loan principal and interest are paid off.

• Compounding refers to how interest is calculated on the total amount, including both the principal and any accrued interest, which influences the total amount owed but does not pertain directly to the repayment structure itself.

• Diminishing loans reduce the principal over time, resulting in lower interest payments as time goes on; however, this does not match the description of paying off the entire balance at the end of the term.

Understanding the nuances of loan types is important in real estate, as different structures can significantly impact repayment strategies