Final answer:
To find the difference in interest cost, calculate the total amount of interest paid for each mortgage rate and subtract the interest paid at 6.00% from the interest paid at 8.00%. The difference in interest cost is $2,355.
Step-by-step explanation:
To find the difference in interest cost, we need to calculate the total amount of interest paid for each mortgage rate.
For the original mortgage at 8.00%, the amount of interest paid over 30 years can be found by subtracting the down payment from the total cost of the home and then calculating the interest on the remaining balance.
This can be done using the formula:
Interest = (Total Cost - Down Payment) * (Interest Rate / 100)
For the new mortgage at 6.00%, we can use the same formula to calculate the interest paid over 30 years.
Once we have the total interest paid for each mortgage rate, we can find the difference by subtracting the interest paid at 6.00% from the interest paid at 8.00%.
Let's calculate the difference in interest cost:
Original Mortgage:
Total Cost = $147,000
Down Payment = 25% of $147,000 = $36,750
Interest Rate = 8.00%
Interest = ($147,000 - $36,750) * (8.00 / 100) = $9,420
New Mortgage:
Total Cost = $147,000
Down Payment = 25% of $147,000 = $36,750
Interest Rate = 6.00%
Interest = ($147,000 - $36,750) * (6.00 / 100) = $7,065
Now, let's find the difference in interest cost:
Difference = $9,420 - $7,065 = $2,355
Therefore, the difference in interest cost is $2,355.