You are assuming a 30-year mortgage for $235,000 at 8% annum interest. How much would you save in interest if you financed this loan at the same interest rate but for 20 years?

Question

Quizplus · Accepted Answer

To calculate the difference in interest, we first need to calculate the total interest paid over 30 years:

Total Interest = (Loan Amount x Interest Rate x Loan Term) - Loan Amount
Total Interest = ($235,000 x 0.08 x 30) - $235,000
Total Interest = $451,200

Now, we can calculate the total interest paid over 20 years:

Total Interest = (Loan Amount x Interest Rate x Loan Term) - Loan Amount
Total Interest = ($235,000 x 0.08 x 20) - $235,000
Total Interest = $302,000

The difference in interest between a 30-year and 20-year loan is:

$451,200 - $302,000 = $149,200

Therefore, the answer is C) $149,013.

You Are Assuming a 30-Year Mortgage for $235,000 at 8