Question

Tamia and Grant, at the end of a 30-year mortgage, would pay $252,791.25 in interest on their urban condo. They could also choose a 15-year mortgage at 3.75%, resulting in a $490.33 mortgage payment. How much more will Tamia and Grant pay for the house if they choose the 30-year mortgage?

Answer 1

To determine the difference in cost between a 30-year and a 15-year mortgage, we need to calculate the total amount paid for each mortgage. The difference in cost is $164,531.85.

Step-by-step explanation:

To determine the difference in cost between a 30-year and a 15-year mortgage, we need to calculate the total amount paid for each mortgage. Let's start with the 30-year mortgage:

Interest paid = Total amount paid - Loan amount

Loan amount = Total amount paid - Interest paid

Loan amount = $252,791.25

Now, let's calculate the interest paid for the 15-year mortgage:

Total amount paid = Monthly payment * Number of months

Monthly payment = $490.33

Number of months = 15 years * 12 months/year

Total amount paid = $490.33 * 15 * 12

Interest paid = Total amount paid - Loan amount

Loan amount = Total amount paid - Interest paid

Loan amount = $88,259.40

The difference in cost between the 30-year and 15-year mortgages is $252,791.25 - $88,259.40 = $164,531.85. Therefore, Tamia and Grant will pay $164,531.85 more for the house if they choose the 30-year mortgage.