You Are Considering the Purchase of a House

question 52

Essay

You are considering the purchase of a house. The house costs $300,000. You have no down payment. You have several financing alternatives.
Alternative 1: 25 year mortgage term 6% interest bimonthly (24 payments/year)
Alternative 2: 20 year mortgage term 6% interest bimonthly (24 payments/year)
Alternative 3: 20 year mortgage term 6% interest monthly (12 payments/year)
For each alternative calculate 1. The payment cost
2. Total cost over the term of the mortgage
3. Total interest cost over the term of the mortgage
4. Compare the results and recommend which is the best decision and explain why.

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Definitions:

Fatty Acids

Long chains of hydrocarbon molecules that are important components of lipids in the body, serving as a major source of energy and playing roles in cell membrane structure.

Amino Acids

Fundamental components of proteins that include a basic amino group, an acidic carboxyl group, and a distinct side chain.

Glucose-6-Phosphate

A glucose sugar phosphorylated at the 6 position, a critical step in glucose metabolism and glycogen synthesis.

Glucose

Glucose is a simple sugar that serves as a primary source of energy for the body's cells, obtained from consumed carbohydrates and required for metabolic processes.