Question

Over the past 40 years, interest rates have varied widely. The rate for a 30-year mortgage reached a high of 14.75% in July 1984, and it reached 4.64% in October 2010. A significant impact of lower interest rates on society is that they enable more people to afford the purchase of a home. In the following exercise, we consider the purchase of a home that sells for $125,000. Assume that we can make a down payment of $25,000, so we need to borrow $100,000. We assume that our annual income is $43,000 and that we have no other debt. Assume that property taxes plus insurance total $250 per month.

THE ANSWER IS NOT: $93658 OR $93662 OR $842 OR $93657 OR $10110 OR 12867288 OR 374,144

What is the difference in the amount we can borrow between the high and low rates mentioned above? (Round your answer to the nearest dollar.)

Answer 1