You Need to Borrow $100,000 for a Down-Payment on a House

question 29

Multiple Choice

You need to borrow $100,000 for a down-payment on a house, and $900.00 per month is the most you can afford. How long a loan term must you get in your mortgage, if the interest rate is 9%?

• A) 15 years 180 months).
• B) 20 years 240 months).
• C) 30 years 360 months).
• D) No solution.

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Definitions:

Contract Interest Rate

The agreed-upon rate of interest that will be charged or paid on a financial contract, such as a loan or bond.

Issued at Discount

When a bond or other security is sold for less than its face value.

Semiannually

Referring to an event or action that takes place twice every year, often at six-month intervals.

Par

The face value of a bond or stock as stated by the issuing company, which may differ from its market value.