Finance
A Minnesota homebuyer is offered a 30-year mortgage at 6% or a 15-year mortgage at 5.5%. The 15-year loan would have a higher monthly payment but:
ARequire private mortgage insurance regardless of down payment
BResult in significantly less total interest paid over the loan term✓ Correct
CAutomatically qualify for a lower home price
DBe unavailable from most Minnesota lenders
Explanation
A 15-year mortgage has higher monthly payments but results in significantly less total interest paid because the loan is repaid in half the time and at a lower interest rate. Over a $250,000 loan, the total interest savings between a 30-year 6% loan and a 15-year 5.
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