In: Finance
Bank loan
Down payment = 0.10
$ 300000 = $ 30000
Mortgage amount = $ 300000 - $ 30000 = $ 270000
Monthly payment is calculated using the following equation
Monthly payment = $1,432.96
$ 1433
Interest paid = $ 1433
360 - $ 270000
Interest paid = $ 245880
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Credit union
Down payment = 0.20
$ 300000
Down payment = $ 60000
Mortgage amount = $ 300000 - $ 60000 = $ 240000
Monthly payment = $ 1823.7
$ 1824
Total interest paid = $ 1824
180 - $ 240000
Total interest paid = $ 88320
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Monica and Brian should choose mortgage from credit union because the total interest paid on the mortgage borrowed from credit union is less than that of the mortgage borrowed from bank.