Question

6. Mortgage lenders base the mortgage interest rate they offer you on your credit rating. This makes it financially critical to maintain a credit score of 700 or higher. How much more interest would you pay on a $194,000 home if you put 30% down and financed the remaining amount with a 30-year mortgage at 5.5% interest compared to a 30-year mortgage at 3.5% interest? (Use the amortization worksheet.)

Excess interest $?

Answer 1

=194000*(1-30%)*12*30*(5.5%/12*1/(1-1/(1+5.5%/12)^(12*30))-3.5%/12*1/(1-1/(1+5.5%/12)^(12*30)))
=100938.4316