finance company has offered them two options: Option A: A fixed-rate mortgage at

Question

finance company has offered them two options: Option A: A fixed-rate mortgage at an interest rate of 6.S% per year compounded monthly, payable over a 30-year period in 360 equal monthly installments. Option B: A fixed-rate mortgage at an in erest rate of 625% per year compounded monthly payable over a 15-year period in 180 equal monthly instan ents. (a) Find the monthly payment required to amortize each of these loans over the life of the loan. (Round your answers to the nearest cent.J Option A: Option B: (b) How much interest would the Martinezes save if they chose the 15-year mortgage instead of the 30-year mortpage? Use the rounded monthly payment values from part (a). (Round your answer to the nearest cent.) 1 0 2 3 4.

Explanation / Answer

a) Option A $ 1,106.12 PMT(6.5%/12,360,-175000) Option B $ 1,500.49 PMT(6.25%/12,180,-175000) b) Interest saved $   128,115 1106.12*360-1500.49*180

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