Which of the following statements best describes the behavior over time of the components of equal mortgage payments?
A)The proportion of interest expense to payment of principal remains the same.
B)Payment of principal increases and interest expense decreases.
C)Both payment of principal and interest expense decrease.
D)Interest expense increases and payment of principal decreases.

Question

Quizplus · Accepted Answer

In a typical mortgage structure, the total payment amount remains constant over time, but the composition of the payment shifts. At the beginning, interest constitutes a larger portion of the payment, but as the principal balance decreases over time, the interest expense decreases and the portion of the payment applied to the principal increases.

Which of the Following Statements Best Describes the Behavior Over