8.7.7

Consider the following pair of mortgage loan options for a $185,000 MORTGAGE.Which mortgage loan has the larger total cost (closing costs + the amount paid for points + total cost of interest)? By how much?

Mortgage A:20-year fixed at 7.25% with closing costs of $1200 and 1 point.

Mortgage B: 20-year Fixed at 6.75% with closing costs of $1200 and3 points.

Choose the correct answer below, and fill in the answer box to complete your choice.

A.

Mortgage B has a larger total cost than mortgage A by ????______.

B.

Mortgage A has a larger total cost than mortgage B by ????______ .

(Round to the nearest dollar as needed.)