Maria and John have been married for 2 years and just learned that they are pregnant. They have been renting a small apartment but decide to purchase a house. They find one that is selling for $525,000. They decide to make a 15% down payment.

Maria and Jon are considering 2 financing options:

Option 1: a 4.0% interest 30-year mortgage

Option 2: a 3.25% interest 15-year mortgage

Answer the following questions showing all your work to reach each answer.

A. Which option will result in a lower monthly payment if they take the full term of the mortgage? What will that monthly payment be?

B. Which option will result in the most total interest if they take the full term of the mortgage? What will that total interest be?