The price of a smat eatin is S50000 The bank regnes a 5% down payment much does

Question

The price of a smat eatin is S50000 The bank regnes a 5% down payment much does the buyer save in interest with the 20-year option? The byer is oftered two mortgage options 20year foed at 8% or 30 year fred at8% Calculate the amou rofite est pac, fr each optonHw Find the monthly payment for the 20-year option Round to the nearest dolar as needed) Find the monthly payment for the 30-year option Round to the nearest dollar as neaded ) Calculate the total cest of linterest for both mortgage options How much does the buyer save in inberest with the 20-ywar option? (Use the answers from parts 1 and 2 to find this ansorer) G ITH

Explanation / Answer

Req 1 Amount borrowed 47500 (50000-5%) Annuity fctor for 120 payments at 0.667% 82.4071 Monthly payment in 20 yr option 576.41 Rreq 2: Amount borrowed 47500 (50000-5%) Annuity fctor for 180 payments at 0.667% 104.6153 Monthly payment in 30 yr option 454.04 Req 3: Total Interest paid in 20 yr option: Total amount paid (576.41*120) 69169.2 Less: Amouunt borrowed 47500 Interest paid 21669.2 Total Interest paid in 30 yr option: Total amount paid (454.04*180) 81727.2 Less: Amouunt borrowed 47500 Interest paid 34227.2 Therefore, Savings in Interest in 20 yr option: 34227.20-21669.2 =12558

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