Let's carefully analyze the terms of the fixed-rate mortgage presented in the table and determine the accuracy of each statement.
Given:
- Principal (P): \[tex]$200,000
- Monthly interest rate (R): 4%
- Total number of monthly payments (n) for a 30-year term: 360
Statements:
1. The homeowner is borrowing \$[/tex]360,000.
- This statement is false as the principal amount borrowed is \[tex]$200,000, not \$[/tex]360,000.
2. The monthly interest rate is 4 percent.
- This statement is true as the given monthly interest rate in the table is 4%.
3. Monthly payments must be made for 30 years.
- This statement is true. Since the total number of monthly payments is 360, and there are 12 months in a year, this amounts to a 30-year term (30 * 12 = 360).
4. The annual interest rate is 4.8 percent.
- This statement is false. There is no information provided about the annual interest rate. Moreover, if the monthly interest rate is 4%, then the annual interest rate would likely be calculated differently (typically it would be higher because of compounding).
5. The homeowner is borrowing \[tex]$200,000.
- This statement is true as it matches the principal amount provided in the table.
6. Monthly payments must be made for 360 years.
- This statement is false. Monthly payments must be made for 360 months, which is equivalent to 30 years, not 360 years.
Conclusion:
The accurate descriptions of the terms of this mortgage are:
- The monthly interest rate is 4 percent.
- Monthly payments must be made for 30 years.
- The homeowner is borrowing \$[/tex]200,000.
So, the correct answer would include statements 2, 3, and 5:
- The monthly interest rate is 4 percent.
- Monthly payments must be made for 30 years.
- The homeowner is borrowing \$200,000.
