Question

Joe Levi bought a home in Arlington, Texas, for $126,000. He put down 30% and obtained a mortgage for 30 years at 7.00%. What is the difference in interest cost if he had obtained a mortgage rate of 5.00%? (Use Table 15.1.) (Use 360 days a year. Round your intermediate values and final answer to the nearest cent.)

Difference            $

15.1 TABLE Amortization table (mortgage principal and interest per $1,000) INTEREST Term 8/% 31% s% 61% 7% 92% 102% 10% in years 5% 6% 7% 8% 9% 11% 12.40 9.89 11.36 13.50 10 10.61 10.86 11.11 1.62 I1.88 12.14 12.67 12.94 13.22 13.78 9.25 10.02 10.83 11.11 11.39 11.67 12.25 12 8.52 9.51 9.76 10.29 10.56 I1.96 12.54 7.15 15 7.91 8.18 8.44 8.72 8.99 9.28 9.56 9.85 10.15 10.45 10.75 11.06 I1.37 7.29 9.59 10.22 17 6.52 7.56 7.84 8.12 8.40 8.69 8.99 9.29 9.90 10.54 10.86 8.06 9.00 9.66 9.99 20 5.80 6.60 6.88 7.17 746 7.76 8.37 8.68 9.33 10.33 6.20 7.13 7.75 8.07 8.39 8.72 22 5.44 6.51 6.82 7.44 9.05 9.39 9.73 10.08 5.85 7.39 7.72 9.09 25 5.01 6.15 6.45 6.76 7,07 8.06 8.40 8.74 9.45 9.81 9,15 30 4.50 5.37 5.68 6.00 6.33 6.66 7.00 7.34 7.69 8.05 8.41 8.78 9.53 6.39 9.37 35 3.99 5.05 5.38 5.71 6.05 6.75 7.11 7.47 7.84 8.22 8.60 8.99

Answer 1

=(-House price*payment per 1000 at 5%/1000+House price*payment per 1000 at 7%/1000)*(1-down payment%)*12*loan term
=(-126000*5.37/1000+126000*6.66/1000)*(1-30%)*12*30
=40960.08000