Consider a $200,000 loan with fixed monthly payments. Compute the amount of interest savings when the term of the loan is 15 years and the interest rate is 6.2% versus when the term is 30 years and the interest rate is 7.5% assuming that the loan is held until its maturity. Ignore time value of money.
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Consider a $200,000 loan with fixed monthly payments. Compute the amount of interest savings when the term of the loan is 15 years and the interest rate is 6.2% versus when the term is 30 years and the interest rate is 7.5% assuming that the loan is held until its maturity. Ignore
Step by step
Solved in 3 steps with 2 images
