Compare loans

Fictional practice: Look past the monthly payment.

• Quote A: a $225,000 loan at 7%, fully paid off over 30 years. The monthly loan payment (principal and interest) is $1,496.93.
• Quote B: the same loan amount at 6.5%. Payments are figured as if over 30 years, but whatever you still owe is due all at once in year five (a balloon payment).
• These quotes are made up. Later chapters use Quote A.

Confirm the real loan terms, whether you plan to live there, fees, when the loan comes due, what property backs it, any personal guarantee and other conditions. Don’t assume the loan percentage in this practice is open to you.