A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The loan will be $216,000 at 6 percent interest for 20 years.

Required:

a. What would be the maturity period if payments are bi-weekly? How much will the borrower pay in total under each payment option (total monthly and bi weekly payments)? Which choice would be less costly to the borrower?

b. Assume that the bi-weekly loan was available for 5.75%. What would be the maturity period if payments are bi-weekly? How much will the borrower pay in total under each payment option (total monthly and bi weekly payments)? Which choice would be less costly for the borrower?