You have decided to purchase a house for $400,000 and are evaluating your options for the mortgage. Assume that your down payment will be 20% of the purchase price, payments will be made monthly, and the first payment will be made at the end of each month.

Answer the following:

A. What is the loan amount (i.e., mortgage amount)?

B. If you select a 30-year mortgage, the interest rate will be 5% annually. What is the monthly payment?

C. If you select a 15-year mortgage, the interest rate will be 4.625% annually. What is the monthly payment?

D. What is the total of all payments for each mortgage? Which one costs you the least over the life of the mortgage (i.e., 30-year or 15-year)?