90.2K

Verified Solution

Link Copied!

Please round to the nearest cent for allanswers.

---------------------------------------------------------------------------------

Compare the monthly payment and total payment for the followingpairs of loan options. Assume that both loans are fixed rate andhave the same closing costs.

You need a ?$160,000 loan.

Option? 1: a? 30-year loan at an APR of 7.25%.

Option? 2: a? 15-year loan at an APR of 6.8%.

----------------------------------------------------------------

Find the monthly payment for each option.

The monthly payment for option 1is?what.

The monthly payment for option 2 iswhat.

?(Do not round until the final answer. Then round to the nearestcent as? needed.)

----------------------------------------------------------------------------------------------------------------

Find the total payment for each option.

The total payment for option 1 iswhat?

The total payment for option 2 iswhat?

?(Round to the nearest cent as? needed.)

----------------------------------------------------------------------

Compare the two options. Which appears to be thebetter?option?

A. Option 1 will always be the better option.

B. Option 1 is the better? option, but only if the borrowerplans to stay in the same home for the entire term of the loan.

C. Option 2 is the better? option, but only if the borrower canafford the higher monthly payments over the entire term of theloan.

D. Option 2 will always be the better option.