Finance
In Hawaii, what is the 'principal' portion of a mortgage payment and how does it change over time?
AA. The principal portion stays constant throughout the loan term
BB. The principal portion increases over time as the outstanding balance decreases, because less interest is owed✓ Correct
CC. The principal portion decreases as the loan ages
DD. There is no principal payment in most Hawaii mortgages
Explanation
In a fully amortizing loan, the principal portion of each payment increases over time because as the balance decreases, less interest accrues, leaving more of the fixed payment to reduce principal.
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