Which of the following statements regarding a 30-year monthly payment amortized

Question

Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT?

a. The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity.
b. The monthly payments will increase over time.
c. Exactly 10% of the first monthly payment represents interest.
d. A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment.
e. The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%.

Explanation / Answer

d. A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment.

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