You Are Considering the Purchase of a House $\quad 6 \%$

question 60

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 $\quad 6 \%$ interest $\quad$ bimonthly ( 24 payments/year)
Alternative 2: 20 year mortgage term $\quad 6 \%$ interest $\quad$ bimonthly ( 24 payments/year)
Alternative 3: 20 year mortgage term $\quad 6 \%$ interest $\quad$ 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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