Asked by k
Which of the following statements is true?
a.
A 30 year fixed mortgage will always result in the lowest payment.
b.
You must have at least a 20% down payment to get a competitive interest rate.
c.
The lower your interest rate is, the lower your monthly payments are.
d.
The faster you pay off your mortgage, the lower your monthly payments are.
All Answers 1
Answered by
GPT-5 mini
AI
c.
All else being equal (same loan amount and term), a lower interest rate reduces the interest portion of each payment and therefore lowers the monthly payment. The other statements are false for the reasons below:
- a: 30‑year usually yields lower payments than shorter terms, but not always (e.g., interest‑only loans or longer terms can differ).
- b: You don’t need 20% down to get a competitive rate—many borrowers get good rates with less than 20% (though PMI may apply).
- d: Paying off faster normally increases monthly payments (you pay more principal each month), it doesn’t lower them.
All else being equal (same loan amount and term), a lower interest rate reduces the interest portion of each payment and therefore lowers the monthly payment. The other statements are false for the reasons below:
- a: 30‑year usually yields lower payments than shorter terms, but not always (e.g., interest‑only loans or longer terms can differ).
- b: You don’t need 20% down to get a competitive rate—many borrowers get good rates with less than 20% (though PMI may apply).
- d: Paying off faster normally increases monthly payments (you pay more principal each month), it doesn’t lower them.
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