Connect Assignment 15 Question 9 (or value 1.00 points Mortgage lenders base the

Question

Connect Assignment 15 Question 9 (or value 1.00 points Mortgage lenders base the mortgage interest rate they offer you on your credit r financially critical to maintain a credit score of 700 or higher. How much more interest would you pay on a $208,000 home if you put 25% down compared to a 30-year mortgage at 35% interest? (Use Table151. Use 360 days a yiar Do not round intermediate calculations. Round your answer to the nearest dollar amount.) his makes it and financed the remaining with a 30-year mortgage at50% interest Excess interest S 65145.6 Reterences eBook & Resources Worksheet Learming Objective 15-01 (2) Utilize an amortization to compute monthly mortgage payments Difficulty: Intermediate Leaming Objective 15-01 (3) Calculate the total cost of interest over the life of a mortgage Ask your instructor a question Check my work/ Previous attempt

Explanation / Answer

We can use the present value of annuity formula to calculate monthly loan installments and Total Interest on both loans. Loan Type 1 PV of annuity = P*{[1-(1+r)^-n]/r} PV of annuity = loan amount = $208000 * 75% = $156000 P = Loan annuity = monthly loan installment = ? r = rate of interest per month = 5%/12 = 0.004167 n = no.of months = 30 years * 12 = 360 156000 = P*{[1-(1+0.004167)^-360]/0.004167} 156000 = P*186.28 P = 837.44 Monthly Loan installment = $837.44 Total Interest amount on this loan = ($837.44*360) - $156000 = $1,45,479 Loan Type 2 PV of annuity = P*{[1-(1+r)^-n]/r} PV of annuity = loan amount = $208000 * 75% = $156000 P = Loan annuity = monthly loan installment = ? r = rate of interest per month = 3.5%/12 = 0.002917 n = no.of months = 30 years * 12 = 360 156000 = P*{[1-(1+0.002917)^-360]/0.002917} 156000 = P*222.69 P = 700.51 Monthly Loan installment = $700.51 Total Interest amount on this loan = ($700.51*360) - $156000 = $96,184 Excess Interest = Total Interest on Loan Type 1 - Total Interest on Loan Type 2 = $1,45,479 - $96,184 = $49,295

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.