Question

a family wants to purchase a house that costs $145,000. they plan to take out a $125,000 mortgage on the house and put $20,000 as a down payment. the bank informs them that with a 15-year mortgage their monthly payment would be $733.04 and with a 30-year mortgage their monthly payment would be $540.18. determine the amount they would save on the cost of the house if they selected the 15-year mortgage rather than the 30-year mortgage.

Answer 1

we have that the 15 year mortagage comes with a monthly paiment of $733.04. Then, the total after the 15 years is:

$\text{total}=(733.04)(12)(15)=131,947.20$

then, for the 30 year mortgage, the monthly fee is $540.18, then the total is:

$\text{total}=(540.18)(12)(30)=194,464.80$

finally, we calculate the difference between both totals to get:

$194464.80-131947.20=62,517.6$

therefore, they would save $62,517.60 if they select the 15 year mortgage