Fifteen-Year Mortgage

### What is the primary benefit of a fifteen-year mortgage compared to a thirty-year mortgage? - [ ] Lower initial down payment. - [x] Lower total interest paid over the life of the loan. - [ ] Lower monthly payments. - [ ] Longer time to pay off the loan. > **Explanation:** The primary benefit of a fifteen-year mortgage is the lower total interest paid over the life of the loan, despite having higher monthly payments compared to a thirty-year mortgage. ### What effect does a shorter mortgage term have on the monthly payments? - [x] Increases monthly payments. - [ ] Decreases monthly payments. - [ ] Keeps monthly payments the same. - [ ] Has no effect on monthly payments. > **Explanation:** A shorter mortgage term, such as a fifteen-year mortgage, increases the monthly payments because the loan amount is spread over fewer months. ### By choosing a fifteen-year mortgage, how does it affect the build-up of home equity compared to a thirty-year mortgage? - [x] Home equity builds up faster. - [ ] Home equity builds up slower. - [ ] Home equity build-up remains the same. - [ ] Home equity does not build up. > **Explanation:** Home equity builds up faster with a fifteen-year mortgage because more of each monthly payment goes toward principal reduction rather than interest. ### Are the interest rates for fifteen-year mortgages generally higher or lower than thirty-year mortgages? - [ ] Higher - [x] Lower - [ ] The same - [ ] Cannot determine > **Explanation:** Interest rates for fifteen-year mortgages are generally lower than those for thirty-year mortgages. ### What term is primarily used to describe the benefit of paying off a mortgage more quickly? - [ ] Amortization - [ ] Bankruptcy - [x] Interest Savings - [ ] Refinance > **Explanation:** The term "interest savings" is primarily used to describe the benefit of paying off a mortgage more quickly, as in the case of a fifteen-year mortgage. ### Could a fifteen-year mortgage impact your ability to save for retirement? - [x] Yes, because higher monthly payments mean less disposable income. - [ ] No, mortgage type has no effect on savings plans. - [ ] Only if the mortgage is adjustable-rate. - [ ] Only if the down payment was less than 20%. > **Explanation:** Yes, because the higher monthly payments associated with a fifteen-year mortgage could reduce the amount of disposable income available for retirement savings. ### Can you refinance a thirty-year mortgage into a fifteen-year mortgage? - [x] Yes, you can refinance. - [ ] No, refinancing is not allowed. - [ ] Only if you have less than ten years remaining. - [ ] Only if mortgage rates are rising. > **Explanation:** Yes, refinancing a thirty-year mortgage into a fifteen-year mortgage is allowed and can be beneficial for reducing interest costs and shortening the repayment term. ### What financial metric might make a fifteen-year mortgage more attractive to a borrower? - [ ] High monthly payments - [ ] High-interest rates - [x] Substantial interest savings - [ ] Longer loan term > **Explanation:** Substantial interest savings make a fifteen-year mortgage more attractive to a borrower willing to take on higher monthly payments for long-term financial benefit. ### In terms of financial planning, who might opt for a fifteen-year mortgage? - [x] Borrowers with higher incomes who can afford larger payments. - [ ] Borrowers who want the lowest monthly payment possible. - [ ] Borrowers with uncertain job prospects. - [ ] Borrowers planning to sell the home within five years. > **Explanation:** Borrowers with higher incomes who can afford larger payments might opt for a fifteen-year mortgage to benefit from lower total interest payments and faster homeownership. ### How does the interest savings of a fifteen-year mortgage compare to a thirty-year mortgage? - [ ] There are no interest savings with a fifteen-year mortgage. - [ ] Interest savings are insignificant. - [x] Interest savings are substantial. - [ ] Interest savings are marginally higher than a thirty-year mortgage. > **Explanation:** The interest savings of a fifteen-year mortgage are substantial compared to a thirty-year mortgage due to the shorter loan term and generally lower interest rates.