Finance
A Connecticut borrower is comparing a 15-year mortgage to a 30-year mortgage of the same amount. Which statement is TRUE?
AThe 15-year mortgage has a higher monthly payment but lower total interest paid over the life of the loan✓ Correct
BThe 15-year mortgage has a lower monthly payment and lower total interest paid
CThe 30-year mortgage has a higher monthly payment
DBoth loans have the same total cost if the interest rates are the same
Explanation
A 15-year mortgage has higher monthly payments (because the same principal is paid in half the time), but significantly less total interest is paid over the life of the loan because the principal is outstanding for fewer years.
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