Mortgage Payments:

Suppose Mr. and Mrs. Klein want to purchase a home for $600,000. They are prepared to put $120,000 down and borrow the rest.

The Kleins know that, ceteris paribus, the amount of each mortgage payment will ____ (decrease/increase/not change) if loan amount decreases. The Kleins should also know that if they sold the house in just a few years, they will see that their mortgage balance has ____ (increased significantly/not decreased by much/decreased significantly/ has slightly increased).