Amortizing Loans and the HUD 223(a)(7) Refinance
An amortizing loan refers to a debt repayment that is repaid over a period of time on a fixed schedule. Amortizing loans are paid in regular installments, and most of the early monthly payments are weighted towards paying interest. All HUD multifamily loans including HUD 221(d)(4) loans, HUD 223(f) loans, HUD 232 loans, and HUD 223(a)(7) loans are fully amortizing.
In the case of fully amortizing loans, the entire principal of the loan will be paid off by the end of the loan term. However, in the case of partially amortizing loans, borrowers will typically have to refinance their loan or make a large, one-time payment (referred to as a balloon payment) before the loan’s term is up.