5. Assume that Jocelyn is comparing two fixed-rate loan options, a 15 year and a 30 year mortgage. Both options have the same in
terest rate and amount borrowed. The 30 year, when compared to the 15 year loan will have a 1)_____________ monthly payment and a 2)___________ total cost when repayment is completed.
When the repayment schedule of the mortgage is calculated, the total amount of the loan (called principal) is divided in a number of identical monthly instalments. In the 30 year mortgage, as the principal is divided into a larger number of months, the amount due on each of them is <u>lower. </u>
The interest is accrued when a payment is made every month. As in the 30-year loan there is a larger number of repayments the aggregate amount repaid in terms of interest in much larger than in the 15-year one. As in both the repayment of the principal is exactly the same, the cost of the 30 year mortgage is <u>larger. </u>
It showed how the Industrial Era was majorly changing the lives of people and how it created easier accesses to the young. It contradicted the reality of it because with this new era, people are always finding loops wholes and acts like these aren't going to contradict it. aazX