Question

Rich and Melinda are comparing mortgages. Their mortgage is for $249,000. If they choose 15 years at 4%, their monthly payment will be $1841.82. If they choose 20 years at 5%, their monthly payment will be $1643.29.

How much will be the total payback amount for each loan?

Answer 1

Answer: 15 year interest = $82,527.60

20 year interest = $ 145,389.60.

Explanation:

If they choose the 15-year mortgage, they will pay 331527.60−249000=$82,527.60 in interest compared to the 20-year loan where the interest would be 394389.60−249000=$145,389.60.

Answer 2

Term payback = 15 yr = $331527.6 20 yr = $394389.65 rounded up by 0.002. Shows 15 yr is $62862.05 less as result of return 5 yrs earlier.

Explanation:

20 yr = $1643.29 at 105% = 82.1645 paid x 12 x 20 = 19719.48 interest + 1561.1257 to loan x 12 x 20 = 374670.168 total with Int at 5%= 394389.648

15 yr=$1841.82.= $1841.82 - 73.6728= 1768.1472 to loan p/m = 20 yr 318266.496 + interest of 73.6728 = 13261.104 total with interest at 4%=331527.6