The Patels took out a 15-year mortgage. How many monthly payments will they have to make on this mortgage? A. 360 B. 60 C. 90 D. 180
The correct answer and explanation is:
The correct answer is D. 180.
Explanation:
A mortgage is typically repaid through monthly payments over the life of the loan. Here, the Patels took out a 15-year mortgage, meaning they will repay the loan over 15 years.
To find out how many monthly payments they will make, you need to calculate the total number of months in 15 years.
- There are 12 months in 1 year.
- Over 15 years, the total number of months = 15 years × 12 months/year = 180 months.
Therefore, the Patels will make 180 monthly payments.
Why other options are incorrect:
- A. 360: This corresponds to a 30-year mortgage (30 × 12 = 360 months), which is double the period the Patels have.
- B. 60: This would be for a 5-year mortgage (5 × 12 = 60 months), much shorter than 15 years.
- C. 90: This corresponds to 7.5 years (7.5 × 12 = 90 months), half the term of the Patels’ loan.
Additional insights:
Mortgages are usually structured to be paid monthly because monthly payments fit well with most people’s budgeting schedules (e.g., monthly salary). The longer the term (number of years), the smaller each monthly payment tends to be, but the total interest paid over the life of the loan will be higher. Conversely, a shorter term means higher monthly payments but less total interest.
In this case, a 15-year mortgage is often seen as a middle ground: the Patels have to make payments for a reasonable period (not too long, not too short), balancing manageable monthly payments and interest cost.
In summary, the Patels will have to make 180 monthly payments on their 15-year mortgage.