What is the primary advantage of a 15-year mortgage compared to a 30-year mortgage at the same interest rate?
Why Smaller total interest paid over the life of the loan Is Correct
Answer B: Smaller total interest paid over the life of the loan
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
People Also Study
Related Alaska Questions
- Which type of mortgage loan is characterized by a fixed interest rate and equal monthly payments that fully repay the loan over its term?Finance
- A mortgage that requires equal monthly payments applied first to interest, with the remainder reducing the principal balance, is called a(n):Finance
- A borrower obtains a 30-year, $240,000 mortgage at 7% annual interest. The monthly payment factor is $6.65 per $1,000 borrowed. What is the approximate monthly payment?Real Estate Math
- A mortgage lender in Alaska charges a higher interest rate to an applicant because of the neighborhood where the property is located, which has a predominantly minority population. This practice is known as:Fair Housing
- A loan of $200,000 at 6% annual interest is interest-only for the first year. What are the total interest payments in the first year?Real Estate Math
- A mortgage loan of $320,000 at 6.5% annual interest. What is the monthly interest for the first payment?Real Estate Math
- A borrower in Alaska obtains a $300,000 mortgage at 6% interest with a 30-year amortization. The approximate monthly payment for principal and interest is:Finance
- An Alaska investor borrows $250,000 at 7% interest for 6 months on a short-term bridge loan. Interest only is paid. Total interest paid is:Real Estate Math
Key Terms to Know
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
Study This Topic
Practice More Alaska Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Alaska Quiz →