Compute the total interest payment for each option

Reference no: EM132196917

Question: You want to purchase a house for $85,000, and you have $17,000 cash available for a down payment You are considering the following two financing options: Option 1: Get a new standard mortgage with 4.5% (APR) interest compounded monthly and a 30- year term. Option 2: Assume the seller's old mortgage (FHA loan) that has an interest rate of 4.0% (APR) compounded monthly, a remaining term of 25 years (from an original term of 30 years), a remaining balance of $45,578, and payments of $253.34 per month. You can obtain a second mortgage for the remaining balance, $22,422, from your credit union at 6.5% (APR) compounded monthly with a 10 year repayment period.

a) Compute the monthly payments for each option over the life of the mortgage.

b) Compute the total interest payment for each option.

Reference no: EM132196917

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