Lucy has just obtained a five-year fixed-rate mortgage to buy her first home.The mortgage is amortized over 30 years.Which of the following statements is most correct?
A)Lucy's payments won't change for the next 30 years.
B)Lucy's payments won't change for the next 5 years.
C)Lucy's payments will increase as the term of the mortgage increases.
D)Lucy's payments will decrease as the term of the mortgage increases.

Question

Quizplus · Accepted Answer

Since Lucy has obtained a five-year fixed-rate mortgage, her payments will remain fixed for the next 5 years. However, after that 5-year period, her payments may increase or decrease depending on the terms of her mortgage agreement. The fact that the mortgage is amortized over 30 years simply means that she will be making payments on the loan for that length of time, but it does not determine whether her payments will remain fixed or change over the term of the mortgage.

Lucy Has Just Obtained a Five-Year Fixed-Rate Mortgage to Buy