Question

The difference between the amount of interest you'd pay if you took out a 30-year mortgage on a home worth $260,000 at an annual rate of 5% vs. a 15-year mortgage on the same home assuming the rate is the same.

Answer 1

if Term is 30 years
Loan amount (P)=	260000
Number of years (n) =	30
Interest rate =	5%
Equal mortgage payment formula = P*i/(1-((1+i)^-n))
260000*5%/(1-((1+5%)^-30))
16913.37312
Total interest payment = (equal payment * number of years)-loan amount
(16913.37*30)-260000
$247,401.10
if Term is 15 years
Loan amount (P)=	260000
Number of years (n) =	15
Interest rate =	5%
.
Equal mortgage payment formula = P*i/(1-((1+i)^-n))
260000*5%/(1-((1+5%)^-15))
25048.99478
Total interest payment = (equal payment * number of years)-loan amount
(25048.99*15)-260000
115734.85
Difference of interest paid = 247401.10-115734.85
$131,666.25
interest paid on 30 years is $131666.25 is more than 15 years interest