Finance
An Iowa homeowner has a 30-year mortgage with monthly payments of $1,450. After 10 years, what portion of the remaining payments is primarily interest?
ALess than 20% is interest in early years
BIn the early years of an amortizing loan, the majority of each payment goes to interest✓ Correct
CPayments are always exactly 50% principal, 50% interest
DInterest exceeds 90% for the entire 30 years
Explanation
In the early years of an amortizing mortgage, the vast majority of each payment goes toward interest and very little reduces principal. As the loan matures, the interest portion decreases and principal portion increases.
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