If a person is going to pay $1000 per month every month for 30 years, what do you know about their mortgage (if the interest rate is positive)?
A)Nothing.
B)The loan amount was more than $360,000.
C)The loan amount was exactly $360,000.
D)The loan amount was less than $360,000.

Question

Quizplus · Accepted Answer

If a person is going to pay $1000 per month for 30 years, the total payment over the life of the loan would be $360,000 ($1000 x 12 months x 30 years = $360,000). However, this does not take into account the interest on the loan. If the interest rate is positive, the loan amount would be higher than $360,000 because the interest would add to the total amount paid over the life of the loan. Therefore, we know that the loan amount was less than $360,000 because the interest would add to the payment amount, making the total payment over 30 years higher than $360,000.

If a Person Is Going to Pay $1000 Per Month