Question

You plan to purchase a $300,000 house using either a 30-year mortgage obtained from your local...

You plan to purchase a $300,000 house using either a 30-year mortgage obtained from your local savings bank with a rate of 7.80 percent, or a 20-year mortgage with a rate of 7.20 percent. You will make a down payment of 15 percent of the purchase price. a. Calculate the amount of interest and, separately, principal paid on each mortgage. What is the difference in interest paid? b. Calculate your monthly payments on the two mortgages. What is the difference in the monthly payment on the two mortgages?

Homework Answers

Answer #1

30 year mortgage:
Monthly payment=PMT(7.8%/12,12*30,-300000*(1-15%))=$1,835.67
Amount of interest paid=1835.67*12*30-300000*(1-15%)=405841.2

20 year mortgage:
Monthly payment=PMT(7.2%/12,12*20,-300000*(1-15%))=$2,007.74
Amount of interest paid=2007.74*12*20-300000*(1-15%)=226857.6

Amount of principal paid will be equal to 300000*(1-15%)=255000 in both the cases
Difference in interest paid=405841.2-226857.6=178983.6
Difference in monthly payment=2007.74-1835.67=$172.07

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You plan to purchase a $380,000 house using either a 30-year mortgage obtained from your local...
You plan to purchase a $380,000 house using either a 30-year mortgage obtained from your local savings bank with a rate of 8.20 percent, or a 15-year mortgage with a rate of 7.00 percent. You will make a down payment of 25 percent of the purchase price. a. Calculate the amount of interest and, separately, principal paid on each mortgage. What is the difference in interest paid? b. Calculate your monthly payments on the two mortgages. What is the difference...
You plan to purchase a $390,000 house using either a 30-year mortgage obtained from your local...
You plan to purchase a $390,000 house using either a 30-year mortgage obtained from your local savings bank with a rate of 8.50 percent, or a 15-year mortgage with a rate of 7.55 percent. You will make a down payment of 20 percent of the purchase price. a. Calculate the amount of interest and, separately, principal paid on each mortgage. What is the difference in interest paid? b. Calculate your monthly payments on the two mortgages. What is the difference...
You plan to purchase a $390,000 house using either a 30-year mortgage obtained from your local...
You plan to purchase a $390,000 house using either a 30-year mortgage obtained from your local savings bank with a rate of 8.50 percent, or a 15-year mortgage with a rate of 7.55 percent. You will make a down payment of 20 percent of the purchase price. a. Calculate the amount of interest and, separately, principal paid on each mortgage. What is the difference in interest paid? b. Calculate your monthly payments on the two mortgages. What is the difference...
You plan to purchase an $140,000 house using a 30-year mortgage obtained from your local bank....
You plan to purchase an $140,000 house using a 30-year mortgage obtained from your local bank. The mortgage rate offered to you is 4 percent. You will make a down payment of 10 percent of the purchase price. a. Calculate your monthly payments on this mortgage. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Monthly payment $ b. Calculate the amount of interest and, separately, principal paid in the 230th payment. (Do not round...
You plan to purchase a $150,000 house using a 15-year mortgage obtained from your local credit...
You plan to purchase a $150,000 house using a 15-year mortgage obtained from your local credit union. The mortgage rate offered to you is 7.5 percent. You will make a down payment of 20 percent of the purchase price. a. Calculate your monthly payments on this mortgage. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))   Monthly payment $    b. Calculate the amount of interest and, separately, principal paid in the 80th payment. (Do not...
You plan to purchase an $120,000 house using a 15-year mortgage obtained from your local bank....
You plan to purchase an $120,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate offered to you is 4.25 percent. You will make a down payment of 10 percent of the purchase price. a. Calculate your monthly payments on this mortgage. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))   Monthly payment $    b. Calculate the amount of interest and, separately, principal paid in the 90th payment. (Do not round...
You plan to purchase a 430,000 house using 30-year mortgage obtained from your local bank. The...
You plan to purchase a 430,000 house using 30-year mortgage obtained from your local bank. The mortgage rate offered to you is 4.5%. You will make the down payment of 20 percent of the purchase price. Calculate your monthly payment on this mortgage? Also, show how much total interest will you be paying.
You plan to purchase a house for $290,000 using a 30-year mortgage obtained from your local...
You plan to purchase a house for $290,000 using a 30-year mortgage obtained from your local bank. You will make a down payment of 20 percent of the purchase price. You will not pay off the mortgage early. Assume the homeowner will remain in the house for the full term and ignore taxes in your analysis. Your bank offers you the following two options for payment. Option 1: Mortgage rate of 6.50 percent and zero points. Option 2: Mortgage rate...
You plan to purchase a $410,000 house using a 15-year mortgage obtained from your bank. The...
You plan to purchase a $410,000 house using a 15-year mortgage obtained from your bank. The mortgage rate offered to you is 4.75 percent. You will make a down payment of 20 percent of the purchase price. a. Calculate your monthly payments on this mortgage. b. Construct the amortization schedule for the mortgage. How much total interest is paid on this mortgage?
You plan to purchase a $130,000 house using a 15-year mortgage obtained from your local credit...
You plan to purchase a $130,000 house using a 15-year mortgage obtained from your local credit union. The mortgage rate offered to you is 5.25 percent. You will make a down payment of 20 percent of the purchase price. a. Calculate your monthly payments on this mortgage. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Monthly payment $    b. Construct the amortization schedule for the first six payments. (Do not round intermediate calculations....