Amortization: The Mortgage Professor #5

A fully amortized payment is split into which two components?

• The principal and the payment

• The principal and the interest

• The loan term and the interest

• The interest rate and the total interest

Casey has an amortized loan payment of $400, and the interest they owe for that month is $50. By how much does Casey pay down the principal?

• $50

• $350

• $400

• $450

As the months progress on an amortized loan...

• The payments stay the same, but the principal is paid down more quickly

• The payments stay the same, but the principal is paid down more slowly

• The payment sizes decrease, but the principal is paid down at the same rate

• The payment sizes decrease, and the principal is paid down more quickly

If you can afford it, why is it a great idea to pay MORE than your amortized payment on a car, home, or other loan? Select all that apply.

• You will pay your loan off faster

• You will pay less total interest

• You will pay less total principal

• You will pay less money overall