A borrower wants to have the lowest monthly payments. Which of the following mortgage rates would the borrower prefer?

Question

Certilyst · Accepted Answer

B Rationale: A borrower would prefer a mortgage rate of 10% for 25 years to achieve the lowest monthly payments. This option allows for extended repayment time, resulting in smaller monthly installments compared to shorter terms.

A 10% mortgage for 20 years would have higher monthly payments due to the shorter repayment period, despite the same interest rate.

An 11% mortgage for 20 years would also incur higher monthly payments than option B due to the higher interest rate combined with the shorter term, making it less favorable for minimizing payments.

Finally, an 11% mortgage for 25 years offers lower monthly payments than the 11% for 20 years, but the interest rate is higher than the 10% options, resulting in overall higher payments over the life of the loan compared to the correct choice of 10% for 25 years.

Illinois National Real Estate Exam

A borrower wants to have the lowest monthly payments. Which of the following mortgage rates would the borrower prefer?