In Alicia's fixed-rate loan, what is true about her monthly payments?

In a fixed-rate loan, the structure of the monthly payments is designed to provide stability over the loan term. Each payment consists of two components: principal and interest. Initially, the portion of the payment that goes toward interest is significantly larger than the portion that pays down the principal. This is because interest is calculated on the remaining balance of the loan, which is highest at the beginning.

As the loan progresses, the principal balance decreases, leading to a lower interest amount being charged on the outstanding balance. Consequently, with each subsequent payment, a greater portion is allocated to pay down the principal. This structure means that more interest is paid at the beginning of the loan compared to the end, which aligns with the characteristics of amortized loans.

Therefore, the statement about more interest being paid at the beginning of the loan accurately reflects how fixed-rate loan repayments are structured. Understanding this concept is crucial for homeowners and investors alike, as it impacts how equity builds over time and informs their financial planning.