Question

Due to his good credit history, Francis was able to purchase a home with a good interest rate on his loan. Assuming Francis has the ability to choose the length of his loan and the amount of the down payment, what method would help Francis decrease the total cost of the loan? Select the best answer from the choices provided. reducing the down payment increasing the length of the loan increasing the length of the loan and reducing the down payment reducing the length of the loan and increasing the down payment

Answer 1

Reducing the length of the loan and increasing the down payment

Step-by-step explanation:

Assuming Francis has the ability to choose the length of his loan and the amount of the down payment.

The method that would help Francis to decrease the total cost of the loan is - reducing the length of the loan and increasing the down payment.

When a person pays more amount in down payment, then he will have to loan out a smaller amount. And he will have to pay less interest. If the loan is short, the interest to be paid will be less. If the loan term is long, the interest also increases. One has to pay interest for the whole tenure of the loan.

So, if someone wants to reduce the loan amount, he must pay more in down payment.

Answer 2

Answer:
Reducing the length of the loan and increasing the down payment.

Step-by-step explanation:
Increasing the down payment will reduce the total amount you will owe to the bank so there will be less interest charges.

The smaller the term, the higher the interest rate but the smaller the time the less the bank will actually receive from you.