Homes & Interiors ©2007

Amortization of a loan shows how much of the monthly payment is paid toward the principal amount borrowed and how much is paid toward the interest on the loan. Use the amortization tables below to compare three loans.

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1			What is the amount of the monthly mortgage payment for Loan 1?
			A)	$616
			B)	$890
			C)	$991
			D)	$81
2			What is the amount of the monthly mortgage payment for Loan 2?
			A)	$600
			B)	$428
			C)	$719
			D)	$829
3			Which loan has the highest monthly mortgage payment?
			A)	Loan 1
			B)	Loan 2
			C)	Loan 3
			D)	Loan 1 and Loan 2
4			What is one difference between Loan 1 and Loan 2?
			A)	No difference
			B)	Higher monthly payment in Loan 2
			C)	Higher interest rate in Loan 2
			D)	Lower interest rate in Loan 2
5			What is one difference between Loan 1 and Loan 3?
			A)	Length of the loan
			B)	Interest rate
			C)	Amount borrowed
			D)	No difference
6			How many years have you paid for the loan if you are on payment 48?
			A)	1 year
			B)	4 years
			C)	12 years
			D)	30 years
7			Which loan is paid in a shorter time?
			A)	Loan 1
			B)	Loan 2
			C)	Loan 1 and Loan 2
			D)	Loan 3
8			Which of the following isnot a reason to pay for a loan in 15 years instead of 30 years if the interest rate and amount borrowed are the same?
			A)	The monthly payment is lower
			B)	More money is applied toward the principal of the loan
			C)	Less money is paid toward interest
			D)	The loan is paid back sooner
9			How much money will you save on payment 180 if you have a 6% loan instead of an 8% loan for a 30 year term?
			A)	$616.01
			B)	$522.24
			C)	$188.26
			D)	$420.15
10			Which loan has the highest amount paid toward the principal throughout the life of the loan?
			A)	Loan 1
			B)	Loan 2
			C)	Loan 1 and Loan 2
			D)	Loan 3