Question

38. If you borrow $150,000, how much could you save over the life of the loan if you took out a 15-year mortgage at 4.5% instead of a 20-year mortgage at 4%?

Answer 1

If you borrow $150,000, how much could you save over the life of the loan if you took out a 15-year mortgage at 4.5% instead of a 20-year mortgage at 4%?

Part 1

15-year mortgage at 4.5%

r=4.5%=0.045

t=15 years

P=$150,000

I=Prt

I=(150,000)*(0.045)*(15)

I=$101,250

Part 2

20-year mortgage at 4%

r=4%=0.04

t=20 years

P=$150,000

I=(150,000)*(0.04)*(20)

I=$120,000

Find out the difference

$120,000-$101,250=$18,750

therefore

the answer is $18,750