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I just bought a home and put $20,000 down but had to take a mortgage for the remaining 170,000 of the purchase price. My bank offered a standard 30 year mtg. with 5.5% nominal interest rate. I figure my monthly mortgage payment will be around $965.24.
Now suppose I decide not to do the 30 year mortgage. If I can get a 15 yr. $170,000 loan at a nominal interest rate of 5.5%, I figure that my monthly payment needs to increase in the amount of 423.80?
How much more interest would I pay if I took our a 30 year mortgage instead of of a 15 year mortgage? $97,459.33?
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Solution Summary
This solution provides a detailed, step-by-step explanation of the given financial accounting problem.
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pv = 170,000
n 30*12 months= 360
i = 5.5/12 = 0.458
fv= 0
compute pmt = ...
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