Question

FedPrimeRate.com reported the median price of a home sold in the United States in November 2017 was $248,000. Juan Carlos Soto, Jr., wants to purchase a new home for $305,500. Juan puts 20% down and will finance the remainder of the purchase. Compare the following two mortgage options he has: 10 years at 3.5% or 15 years at 5%. Calculate Juan’s monthly payment as well as his total cost of interest for both the 10- and 15-year mortgage. What is the difference in interest paid between the two options (round to nearest cent in calculations)?

Answer 1

Mortgage	10 Year	15 Year
Loan amount	244400	244400
Rate	3.50%	5%
Monthly payment	$2,416.77	$1,932.70
Total cost	$290,012.47	$347,885.93
Total interest	$45,612.47	$103,485.93
Difference in Interest	$57,873.46

Workings

AutoSave Off) Book1 Excel Sign in Comments O Tell me what you want to do Share File Formulas Review View Help Home Insert Draw Page Layout Data Σ. Insert Delete X A A EE Calibri 11 General L Paste Sort & Find & Filter Select Conditional Format as Cell В I U A 0 Format T Formatting Table Styles Alignment Clipboard Font Number Styles Cells Editing for Mortgage 12 G Н K L 1 Mortgage 10 Year 2 15 Year 305500 80% 305500 80% Loan amount Rate Monthly payment 0.035 0.05 PMT(J4/12,10*12,-13) PMT(K4/12,15*12,-K3) - K5*15 *12 5 Total cost 6 J5*10*12 Total interest 7 =J6-13 -К6-К3 Difference in Interest 8 K7-17 9 10 11 12. 13 14 15