A mortgage loan requiring monthly payments of $1,175.75 for 20 years with a final payment of $25,095 is classified as what type of mortgage?

The type of mortgage described is classified as a balloon mortgage. This classification arises from the structure of the loan, where the borrower makes regular monthly payments that do not fully amortize the loan by the end of the term. Instead, there is a sizable final payment, known as the "balloon payment," that is significantly larger than the preceding monthly payments.

In this scenario, the regular monthly payments of $1,175.75 over 20 years only cover part of the principal and interest, while the large final payment of $25,095 represents the remaining balance that has not been paid down. This characteristic of having a large payment due at the end differentiates a balloon mortgage from other types, such as fixed-rate or interest-only mortgages.

A fixed mortgage, for example, typically involves consistent monthly payments that fully amortize the loan over the term, while a variable mortgage has interest rates that can change over time. An interest-only mortgage permits the borrower to pay only interest for a specified period, leading to no reduction in principal until later. The presence of a large final payment confirms that this particular loan is structured as a balloon mortgage, highlighting its unique payment structure.