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Which mortgage will give you the lowest monthly payment

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Reference no: EM133056200

Be sure that you show all of your work to reach your answer. Each step must be on a separate line. Your method to reach your answer must be clear and include explanations.

You plan to purchase a house for $400,000 and you will make a 20% down payment. You are evaluating two mortgage offers: a 30-year fixed mortgage at 3.13% and a 15-year fixed mortgage at 2.35%. Your goal is to have a monthly payment that fits within your
budget.

a. Which mortgage will give you the lowest monthly payment? What will that payment be? How much less will this be than the other monthly mortgage payment?

b. Assuming you take the full term of the mortgage, which mortgage will result in you paying the most interest? What will that interest be?

Reference no: EM133056200

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