You are applying for a mortgage for $150,000 to buy a house. You shop around and find these two possible mortgage options:
A 20 year mortgage loan with an APR of 6%.
A 30 year mortgage loan with an APR of 5%.
What are your monthly payments with each loan?
How much will you pay over the life of each loan? How much of that is interest?
Which option would you choose?
The payments on a mortgage loan are dependent upon the amount of the loan, the interest rate, the payment frequency and the length of time of the loan agreement.
Answer and Explanation:
The answers are:
Twenty-year payment = $1,074.65; total payments = $257,916; and total interest = $107,916.
Thirty-year payment = $805.24; total...
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from Finance 102: Personal FinanceChapter 7 / Lesson 4