Mortgage vs. Investment Decision Quiz

What is the primary factor to consider when deciding between paying off a mortgage early or investing?

• The size of your mortgage

• The location of your property

• Your monthly income

• Your mortgage interest rate

In a standard mortgage, what are the two main components of each monthly payment?

• Principal and interest

• Taxes and insurance

• Principal and taxes

• Interest and insurance

How does an amortization schedule affect the payment of a mortgage?

• It increases the principal amount

• It decreases the interest rate

• It shortens the loan term

• It frontloads interest payments

What is the average annualized return of the S&P 500 since 1957?

• 5.26%

• 7.26%

• 10.26%

• 12.26%

If your mortgage interest rate is 3%, what is the financial advantage of investing instead of paying off the mortgage?

• Mortgage interest rates are fixed

• Investments are risk-free

• Mortgage payments are tax-deductible

• Investments typically yield higher returns

What intangible benefit might influence someone to pay off their mortgage early?

• Higher credit score

• Peace of mind

• Lower insurance premiums

• Increased property value

How does the time horizon affect the decision to invest or pay off a mortgage?

• Shorter time horizons favor paying off the mortgage

• Shorter time horizons favor investing

• Longer time horizons favor investing

• Time horizon has no effect

What is one strategy to pay off a mortgage faster?

• Reducing monthly payments

• Increasing the loan term

• Making bi-weekly payments

• Refinancing the mortgage

What should you do with a windfall of cash to reduce your mortgage term?

• Apply it to the principal balance

• Invest it in stocks

• Save it for emergencies

• Use it for home improvements

What is a potential benefit of making extra payments towards your mortgage?

• Increased monthly payments

• Higher interest rates

• Reduced total interest paid

• Longer loan term