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# Loan Payment: 15-Year Mortgage Versus a 30-Year Mortgage

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A loan officer states that "Thousands of dollars can be saved by switching to a 15-year mortgage from a 30-year mortgage".

Calculate the difference in payments on a 30 year mortgage at 9% interest versus a 15 year mortgage with 8.5% interest. Both mortgages are \$100,000 and have a monthly payments. What is the difference in total dollars that will be paid to the lender under each loan?

#### Solution Preview

Note: the abbreviations have the following meanings

PVIFA= Present Value Interest Factor for an Annuity
It can be read from tables or calculated using the following equation
PVIFA( n, r%)= =[1-1/(1+r%)^n]/r%

Step 1: Calculate monthly payments in both the options

1 30 year motgage at 9% interest

Frequency= M Monthly
No of ...

#### Solution Summary

The expert examines a 15-year mortgage versus a 30-year mortgage in a loan payment.

\$2.49