1.) Why might a lender conclude that interest-only mortgages are even within the commercial loan market somewhat risky? Please explain your reasoning briefly.

2.) When analyzing a fixed rate residential mortgage with fixed monthly payments over a period of 30 years, when would you expect to see the highest amount of interest payments, relative to principal payments?

Month 1 (1st payment)

Month 180 (Midpoint of payment schedule)

Month 360 (final payment)

It will remain the same through all payments