With a conventional amortized mortgage loan, what is TRUE about each monthly principal and interest payment?...

With a conventional amortized mortgage loan, what is TRUE about each monthly principal and interest payment?

a. The loan payment will go up each month.

b. The portion used to pay interest increases.

c. The portion used to pay interest decreases.

d. The loan payment will go down each month.

Solutions

Expert Solution

The correct option is C

The monthly payment is fixed and the principal component of it as the maturity becomes closer increase while the interest component decreased because the outstanding amount on the loan decreases which reduces interest payment.

jeff jeffy answered 2 years ago

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