FinanceQuestion 73 of 120
In an amortized loan, the early payments are applied:
a.Mostly to interest, with a small portion to principal
b.Entirely to principal
c.Entirely to property taxes
d.Mostly to principal, with a small portion to interest
Explanation
In a standard amortizing loan, early payments are weighted heavily toward interest because the outstanding balance is high. As the balance declines, more of each payment goes toward principal.
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