which combination of factors would result in the lowest monthly mortgage payment?

Which combination of factors would result in the lowest monthly mortgage payment?

A. Big down payment, a longer term loan, and a low interest rate.

B. Big down payment, a shorter term loan, and high interest rate.

C. Small down payment, a shorter term loan, and high interest rate.

D. Small down payment, a shorter term loan, and small interest rate.

Answer:- The correct option is D. Small down payment, a shorter term loan, and small interest rate.

The variables that define the monthly mortgage payment are loan amount, length of loan term and interest rate. However, the lower loan amount that results from a bigger down payment lowers monthly payments. The shorter the term of a loan, the larger its monthly amount becomes due to quicker repayments in smaller payments. Therefore, the lower rate of an interest decreases the cost of total interest paid throughout life and thus it reduces monthly obligations.

Among alternatives, a low down payment retains high loan value. However, a shorter period increases the amount paid. This is countervailed by a low interest rate, which minimizes the total amount of interests that need to be paid on regular monthly basis. Due to the lower subsidized rate as well as short term, the monthly principal payment increases but it means that nearly all of interest portion reduces. This compound form yields the least monthly fee, based on a smaller effect of larger loan value from small down payment.

A large down payment reduces the loan amount itself, but does less to lower monthly payments where it is coupled with a longer length or higher rate. And a high fee, with short time and low down payment increases the interest part of it very much bigger amount then smaller monthly payments for little in first option . So, D represents the ideal combination of variables that will yield the lowest monthly mortgage payment.