33
QuizMultiple Choice

Mortgages

Question 33 • 26-27 Ignite Technical Math-Financial Math - MA2007

Which of the following statements is true.I. The higher your interest rate, the higher your monthly mortgage payments.II. The higher your down payment, the higher your monthly mortgage payments.III. A 30 year mortgage fixed at 6% will have smaller payments that a 20 year mortgage fixed at 6%.

Answer
A
I only
B
II only
C
I, II, and III
D
I and III

Explanation

A higher interest rate increases the cost of borrowing, so statement I is true. A larger down payment means you borrow less, which generally lowers—not raises—your monthly payment, so statement II is false. At the same 6% rate and for the same loan amount, a 30-year mortgage spreads repayment over more months than a 20-year mortgage, making its monthly payments smaller. Therefore, the true statements are I and III: choice D.

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