In purchasing a house, you need to obtain a mortgage with a present value (loan amount) of
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In purchasing a house, you need to obtain a mortgage with a present value
(loan amount) of $175,000. You have a choice of: (A) a 30 year mortgage at an interest rate / year of 9.74% or (B) a 15 year mortgage at an interest rate /
year of 9.46%. What is the annual payment required by the two alternative mortgages? How much of each year's payment goes to paying interest and how much to reducing the principal balance by the two alternative mortgages? Which mortgage would you prefer?
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