Question

how to calculagte this answer- A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the loan for 15 years at 5 1/2% or for 30 years at 6 1/2%. To the nearest dollar, what is the difference between the monthly payments for these two loans?

Answer 1

Answer: $409.20

Explanation:

given;

loan amount = $220,000

loan option 1 = 15 years at 5.5%

loan option 2 = 30 years at 6.5%

solution:

1. monthly payment for loan 1.

$220,000/$1000 = 220

15 years at 5.5% = $8.18 * 220

= $1799.60

2. monthly payments for loan 2.

30 years at 6.5% = $6.32 * 220

= $1390.40

difference between both monthly payments.

loan option 1 monthly payment - loan Option 2 monthly payment

= $1799.60 - $1390.40

= $409.20

Answer 2

The  difference between the monthly payments for these two loans is $409.20

• The calculation is as follows:

monthly payment for loan 1.

$220,000 ÷ $1000 = 220

15 years at 5.5% = $8.18  × 220

= $1799.60

2. monthly payments for loan 2.

30 years at 6.5% = $6.32  × 220

= $1390.40

difference between both monthly payments.

= loan option 1 monthly payment - loan Option 2 monthly payment

= $1799.60 - $1390.40

= $409.20

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