The next four questions are related to your purchase of your first home for $700,000.

You have just purchased the house and have put a 10% down payment, and will borrow the remaining amount. The 15-year fixed rate loan has an Annual Percentage Rate (APR) of 3.25%. You will make monthly payments for the life of the loan.

Your effective interest rate is closest to which of the following?

a.2.875%

b.2.986%

c.3.2500%

d.3.2989%

e.2.885%

How much is your monthly payment?

a. $3,000 to $3,500

b. More than $4,000

c. $2,500 to $3,000

d.$3,500 to $4,000

e. Less than $2,500

Assume that you make payments for one year. How much have you reduced the principal balance that is, the amount that you owe on the loan?

a.Less than $20,000

b.$20,000 to $25,000

c.$30,000 to $35,000

d.$25,000 to $30,000

e. More than $35,000

Assume that you make payments for one year. How much have you paid in interest?

Select one:

a. Less than $10,000

b.More than $25,000

c.$10,000 to $15,000

d.$15,000 to $20,000

e.$20,000 to $25,000