You are planning to purchase a house that will require a mortgage of $400,000. You find 2 mortgage offers both at the same rate of 2.75%. One is a 30-year mortgage and the other is a 20-year mortgage. You ask your friend what advantage there is to be paying more per month on the 20-year mortgage. Your friend replies that it is all about total interest. What is the difference between the total interest paid over the term of the 30 year and 20-year mortgage? Be sure to show all of your work.
You are planning to purchase a house that will require a mortgage of $400,000. You find 2 mortgage offers both at the same rate of 2.75%. One is a 30-year mortgage and the other is a 20-year mortgage. You ask your friend what advantage there is to be paying more per month on the 20-year mortgage. Your friend replies that it is all about total interest. What is the difference between the total interest paid over the term of the 30 year and 20-year mortgage? Be sure to show all of your work.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You are planning to purchase a house that will require a mortgage of $400,000.
You find 2 mortgage offers both at the same rate of 2.75%. One is a 30-year mortgage and the other is a 20-year mortgage.
- You ask your friend what advantage there is to be paying more per month on the 20-year mortgage. Your friend replies that it is all about total interest.
What is the difference between the total interest paid over the term of the 30 year and 20-year mortgage? Be sure to show all of your work.
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