Solve the total interest cost over the term of the mortgage

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You are considering the purchase of a house. The house costs $300,000. You have no down payment. You have several financing alternatives.

Alternative 1:

25 year mortgage term        6% interest            Bimonthly (24 payments/year)

Alternative 2:

20 year mortgage term             6% interest           Bimonthly (24 payments/year)

Alternative 3:

20 year mortgage term              6% interest               Monthly (12 payments/year)

Question a: For each alternative calculate

1. The payment cost

2. Total cost over the term of the mortgage

3. Total interest cost over the term of the mortgage

4. Compare the results and recommend which is the best decision and explain why.

Reference no: EM132569154

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