You purchase a home for $120,000. You obtain a 30 year loan from Bank Second, paying...

You purchase a home for $120,000. You obtain a 30 year loan from Bank Second, paying 20% down, with your loan to be paid off in monthly payments.

a. If the annual interest rate is 8.5% and your first payment is in February, what is your outstanding principal balance after your April payment?

b. How much interest would you save by obtaining a 15 year loan versus a 30 year loan? Show all work.

Solutions

Expert Solution

95824.29

=PMT(8.5%/12,12*30,-120000*(1-20%))*12*30-PMT(8.5%/12,12*15,-120000*(1-20%))*12*15
=95573.5043

jeff jeffy answered 1 year ago

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