Question

Suppose you want to purchase a home for $425,000 with a 30-year mortgage at 5.54% interest. Suppose also that you can put down 25%. What are the monthly payments? (Round your answer to the nearest cent.)
$

What is the total amount paid for principal and interest? (Round your answer to the nearest cent) $

What is the amount saved if this home is financed for 15 years instead of for 30 years? $

Answer 1

Using financial calculator
Input: Loan amount =PV = 425000*75% = 318750

N = 30*12 = 360

I/Y = 5.54/12

Solve for PMT as -1817.84. Hence the monthly payment = $1817.84

Total amount paid = monthly payment * 360 = 1817.84*360

=$ 654422.40

If the house is finance for 15 years,

Using financial calculator
Input: Loan amount =PV = 425000*75% = 318750

N = 15*12 = 180

I/Y = 5.54/12

Solve for PMT as -2611.22. Hence the monthly payment = $2611.22

Total amount paid = monthly payment * 180 = 2611.22*180

=$ 470020.37

Amount saved = 654422.40 - 470020.37

= $184402.03