1. If a loan is held to maturity, a prepayment penalty in a mortgage has the effect of ________ the APR.
Increasing
Decreasing
Doesn't affect
Cannot determine the effect
2. A borrower takes out a 30-year mortgage loan for $250,000 with an interest rate of 5% and monthly payments. What portion of the first month’s payment would be applied to interest?
$694
$1,042
$1,342
$1,355