A Loan Officer States,"Thousands of Dollars Can Be Saved by Switching

question 110

Essay

A loan officer states,"Thousands of dollars can be saved by switching to a 15-year mortgage from a 30-year mortgage." Calculate the difference in payments on a 30-year mortgage at 9% interest versus a 15-year mortgage with 8.5% interest.Both mortgages are for $100,000 and have monthly payments.What is the difference in total dollars that will be paid to the lender under each loan?

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Definitions:

Budget Constraint

The limit on the consumption bundles that a consumer can afford given their income and the prices of goods and services.

Weekly Income

The total amount of money earned or received by an individual or entity within the span of a week.

Doughnuts

A type of fried dough confectionery or dessert food, typically ring-shaped, sweet, and sometimes filled.

Coffee

A beverage made from roasted and ground seeds of the Coffea plant, consumed worldwide for its stimulating effects.