Question

TUI

The First National Bank of Hillcrest charges more for a 30-year mortgage than

for a 15-year mortgage. What accounts for this difference?

O

A. There is a greater risk that a longer-term loan will not be repaid.

O

B. The bank wants to discourage people from buying homes.

O

C. There are more people who want long-term loans.

O

D. The bank wants to move money from personal loans to business

loans.

Answer 1

The correct answer is A)There is a greater risk that a longer-term loan will not be repaid.

Step-by-step explanation:

Longer-term loans usually have higher interest payments than short-term longs, the reason is, as stated in the answer, that the longer the loan, the higher the risk that the borrower will not be able to repay the complete loan, interest included.

For example, a 10 year mortgage is cheaper than a 40 year mortgage because a lot more things can happen in 10 years than in 40 years that might affect the loan. In the span of 40 years the borrower could even die.