Assume your current mortgage payment is $900 per month. If you begin to pay $1,000 per month (with the extra $100 per month going to principal), which of the following will be TRUE?

Question

Quizplus · Accepted Answer

By paying an extra $100 per month towards the principal, the mortgage balance will decrease faster. This means that less total interest will be paid over the life of the loan, as interest is based on the remaining balance. The total paid (principal and interest) will likely decrease overall with the higher payment, but this would depend on the interest rate and remaining term of the loan. The total principal paid will also increase with the higher payment, not decrease. Therefore, option C is the correct answer.

Assume Your Current Mortgage Payment Is $900 Per Month