Bill and Melinda are in the market to buy their first home.They think that they can afford a mortgage of $200,000 plus they have $40,000 for a down payment.They are looking for a house costing $240,000 or less.Both of them telecommute from their home-based office, so they can buy anywhere in Michigan as long as it is in the Lower Peninsula.

Step 1 - Determine their monthly mortgage payments.Bill and Melinda want to know the difference in cost between a 30-year fixed mortgage and a 15-year fixed mortgage.To determine the cost, use the following mortgage calculator:

http://www.bankrate.com- Use mortgage option tab and Mortgage Calculator (show amortization schedule to determine total interest.

Assume their loan amount is $200,000 and the mortgage rate is 5%.

What are their monthly payments for a 30-year fixed rate mortgage? ________

How much will they pay in interest over the 30-year period? _________

What are their monthly payments for a 15-year fixed rate mortgage? ________

How much will they pay in interest over the 15-year period? __________

Are you surprised by you findings?Explain.