Question

Alyssa's monthly mortgage costs are lower than those of her neighbor, Steven. Steven doesn't understand how this is possible because Alyssa paid more money for her house. What could be the reason for this difference in costs?

Answer 1

Alyssa could simply have put down more cash than Steven did when they respectively bought their houses. Also different financial institutions have different policies, so based on that principal Steven could be taking out a mortgage loan from an institution with insanely high interest rates, etc.

Answer 2

Alyssa got a better interest rate on her loan

Step-by-step explanation:

Those who have a property registered in their own name and need money, can mortgage the house or apartment to raise this money. The mortgage, also called real estate refinancing, is a loan that has as payment guarantee a property already paid.

For this reason, banks that refinance charge lower interest rates than personal loan or overdraft fees, for example, which do not have a collateral. The better the interest rate on the homeowner's loan, the lower the monthly mortgage costs, regardless of the value of the home.

Alyssa obtained a better interest rate on her loan for that reason, the monthly costs of her mortgage are lower.