Amortization in Relation to the Freddie Mac SBL Program
Amortizing loans consist of loans in which each payment consists partly of principal, and partly of interest. This is in contrast to interest-only loans, which only consist of interest payments. Amortizing loans can come in two varieties; fully amortizing loans, in which the entire loan principal is paid off by the end of the loan term, and partially amortizing loans, in which a balloon payment is due at the end of the loan. The vast majority of multifamily loans (including most Freddie Mac multifamily loans) are partially amortizing, with some partial or full-term interest-only loan options. This also true of the Freddie Mac SBL program, where all amortizing loan options are partially amortizing, with some full-term interest-only loan options.