Question

Jacqueline is deciding between two mortgages for her new home. The first

mortgage is an 80/20 mortgage with interest rates of 4.75 and 7.525%,
respectively. The second mortgage is a 30-year mortgage with a 5.25% and a
$58.30 monthly PMI. If the house price is $145,000, which mortgage payment
will be lower initially, and by how much?
A. 30-year mortgage by $49.93
B. 80/20 mortgage by $41.34
C. 80/20 mortgage by $50.62
D. 30-year mortgage by $33.56

Answer 1

80/20 mortgage by $37.25

Explanation:

First mortgage

0.8 × 145000 = 116000 PMT multiply both of them

= 116000(.0475/12) / [1 - (1 + .0475/12)^(-12 * 30)] PMT = 605.11

The 2nd Mortgage 0.2 × 145000 = 29000

2nd mortgages are normally only interest payments

I = 29000(.07525/12) I = $181.85 divide the interests by the denominator

605.11 + 181.85 = 786.96

Second Mortgage

PMT = 145000(.0525/12) / [1 - (1 + .0525/12)^(-12 * 30)] divide the mortage

PMT = 800.70

800.7 + 58.3 = 859.00

Therefore, the 80/20 mortgage is lower by $37.25¢

Answer 2

Answer: 50.62

Step-by-step explanation: took the quiz