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Friday, April 26, 2024    		 
Household Math™: Early Mortgage Payoff
by Scott Bilker
Scott Bilker
Scott Bilker is the author of the best-selling books, Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. He's also the founder of DebtSmart.com. More about and DebtSmart can be found in the online media kit.
 
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Test your knowledge by trying to solve these DebtSmart, Household Math™ problems! After you complete the problem you’ll get the solution and explanation.
 
1. Assume a person is buying a $150,000 home at a rate of 7% interest on a 30-year loan, with the usual 20% down payment (so the loan would be $120,000). This person also has $20,000 in cash reserves. In which of these two scenarios would this person end up paying less money over the course of the loan?
Putting down the $20,000 as a down payment, increasing the down payment to $50,000, and lowering the loan amount to $100,000
Taking out a $120,000 loan at 7% and then putting the $20,000 as a first payment towards that loan.
Both (1) and (2) are exactly the same.
I don't know!



 

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