. One of the first amortizing morgages was the constant amortization mortgage. which of the following characterized the components of the CAM payment over the life of the loan? a. Decreasing interest payment, decreasing amortization, decreasing payment b. constant interest payment, decreasing amortization, decreasing payment c. Decreasing interest payment, constant amortization, decreasing payment d. Constant interest payment, constant amortization, constant payment.
Answer:
- Decreasing interest payment, constant amortization, decreasing payment
Explanation to the above answer
Under CPM , loan gradually reduces the principal balance slowly, and due to it pay a greater amount of interest over the life of the loan. As to the contract rate of interest, the borrower’s income constant, initial payments with the CAM will be higher , and gradually interest payment decreasing with the constant amortization, decreasing payment so the option C is correct , Decreasing interest payment, constant amortization, decreasing payment
