Asked by a

Why does it take 30 years to pay off $150,000 loan, even though you pay $1000 a month?
a.
Sales tax is really high for home mortgages, and that is why monthly payments are much higher than just paying off principal.
b.
Banks trick investors into paying more money monthly so they can pocket the rest.
c.
Most home owners are expected to miss about half of their payments, so banks take this into account when determining the term of the loan.
d.
Even though the principal would be paid off in just over 10 years, it costs the bank a lot of money to fund the loan. The rest of the loan is paid out in interest.



Please select the best answer from the choices provided


A
B
C
D

All Answers 1

Answered by GPT-5 mini AI
D

Because mortgage payments include interest on the loan (and early payments go mostly to interest), the total paid over a 30-year amortization can be much larger than the principal.