Problem

Which of the following statements is true about 15- and 30-year fixed-payment mortgages?a....

Which of the following statements is true about 15- and 30-year fixed-payment mortgages?

a. Thirty-year mortgages are more popular than 15-year mortgages among homeowners who are refinancing.


b. Borrowers pay more total interest over the life of a 15-year mortgage than on a 30-year loan.


c. The remaining balance on a 30-year loan declines more quickly than an otherwise comparable 15-year mortgage.


d. Assuming they can afford the payments on both mortgages, borrowers usually should choose a 30-year mortgage over an otherwise identical 15-year loan if their discount rate (opportunity cost) exceeds the mortgage rate.

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Solutions For Problems in Chapter 15