3. Amortize a $250,000 (Sale Price) house on a 30 year loan at 4.0% annual interest...

3. Amortize a $250,000 (Sale Price) house on a 30 year loan at 4.0% annual interest rate Amortize a $250,000 (Sale Price) house on a 15 year loan at 3.0% annual interest rate (7) What will be the total cost of the 30 year loan? (Total of all Interest & Principle ) (8) What will be the total cost of the 15 year loan? (Total of all Interest & Principle ) (9) At the end of 4 years, how much less will the loan balance of the 15 year mortgage be compared to the 30 year? (10) If you were buying a house at age 30, which loan would you prefer?

Solutions

Expert Solution

As a 30 year old , it is preferable to opt for the 15 year loan as in early stage of one's career with income earning potential, it is better to payoff the loan early with lesser overall cost compared to the longer tenure loan. Moreover, longer term would put one in EMI trap right through the working years.

Formulae

Formulae as above...

jeff jeffy answered 1 year ago

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