Final answer:
The main advantage of a 15-year mortgage loan compared to a 30-year loan is that the borrower will pay far less interest over the life of the loan. A 15-year mortgage loan allows for faster principal repayment, therefore reducing the total interest. The correct answer to the question is option 2.
Step-by-step explanation:
When comparing 15-year mortgage loans to 30-year mortgage loans, one major advantage for the borrower of the shorter-term loan is far less interest paid over the life of the loan. This is because with a 15-year term, the principal is paid down faster, reducing the balance on which interest is calculated. Although the monthly payments are higher with a 15-year mortgage, the overall interest paid throughout the term of the loan will be significantly less compared to a 30-year mortgage.
If the inflation rate falls unexpectedly by 3%, a homeowner with an adjustable-rate mortgage (ARM) would likely experience a decrease in their interest rate. This is because ARMs are typically tied to an index that moves with market interest rates, which in turn can be influenced by changes in inflation. As inflation decreases, market interest rates tend to follow, leading to a reduction in the interest rate for ARMs and therefore, potentially lower monthly mortgage payments for the homeowner.
In summary, while option 3 (obtaining with a smaller down payment) and option 4 (eligibility for an ARM) may not necessarily be true in all circumstances, the correct answer is option 2, as a 15-year mortgage substantially lowers the total interest paid over the life of the loan.