Question

How would a bigger down payment be beneficial to borrowers?
a.
A bigger down payment is only beneficial for a person applying for a home loan.
b.
A bigger down payment is essentially a bribe to the dealership, guaranteeing a few extra bells and whistles for free.
c.
A bigger down payment means that the borrower has more money, and can afford a bigger loan.
d.
A bigger down payment is money paid toward principal, interest free, which also decreases the amount paid monthly.


Please select the best answer from the choices provided

A
B
C
D

Answer 1

D

A larger down payment reduces the loan principal (no interest charged on that portion), lowers monthly payments and total interest paid, and can improve loan terms (rate, avoiding PMI on mortgages).