What term describes a final payment on a mortgage that is significantly larger than the regular periodic payments?

The term that describes a final payment on a mortgage that is significantly larger than the regular periodic payments is known as a balloon payment. A balloon payment typically occurs at the end of a loan term and is larger than the preceding payments, which can be substantially smaller and often do not cover the full interest or principal amount.

In the context of a mortgage, a balloon loan structure allows borrowers to make lower monthly payments for a certain period, which can make it appealing for those who may expect to sell or refinance before the balloon payment comes due. This method results in a large final payment that the borrower needs to plan for, as it can often be a financial burden unless adequate funds are available.

Other terms provided relate to different aspects of mortgage payments. Amortization payment refers to regular payments that include both principal and interest, designed to pay off the loan balance over time without a large final payment. An adjustable payment involves fluctuations in the payment amount based on changes in interest rates. Lastly, a final payment is a vague term that does not specifically denote the significant size of the last payment compared to the regular installments, making it less accurate in this context.