You are thinking of purchasing a house that costs $265,000. You have $23,000 in cash that you can use as a down payment, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires monthly payments and has an annual interest rate of 5.65% per year. What will your monthly payments be if you sign up for this mortgage? Draw the amortization schedule on a monthly basis using Excel. Calculate the total amount of interest paid throughout the life of the loan. Create a graph depicting the changes in the portions of interest and principal for each monthly payment throughout the life of the loan.

Suppose the interest rate decreases to 4.75% per year and the length of repayment decreases to 15 years. What will the new monthly payment be? Draw a new amortization schedule in a separate Excel sheet. Calculate the total amount of interest paid throughout the life of the loan. How much do you save if you go with the 15-year mortgage versus the 30-year mortgage example above?