Problema Solution
In terms of paying less in interest, which is more economical for a $220,000 mortgage: a 30 year fixed rate at 7.5% or a 20 year fixed rate at 7%. How much is saved in interest?
______the 30 year 7.5% loan is more economical
_______the 20 year 7% loan is more economical
Answer provided by our tutors
In terms of paying less in interest, which is more economical for a $220,000 mortgage: a 30 year fixed rate at 7.5% or a 20 year fixed rate at 7%. How much is saved in interest?
220,000 x 0.075 = $16500 / 30 years = 550 per year
220,000 x 0.07 = 15400/20 years = 770 per year
the 20 year 7% loan is more economical
16500 - 15400 = $1100 saved in interest