When a borrower maks payments on a fully amoritized loan, her debt service payments will cover:
A. only principal on the loan
B. only interest on the loan
C. both principal and interest on the loan
D. principal, interest, taxes, and insurance
Answer: C. principal and interest on a loan
A fully amortized loan is repaid through regular paymets that include both apportion of the principal and interest. Final payment will pay off the principal balance, leaving no need for a balloon payment.
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