Mortgages 15yr vs 30 yr
Q1a
Excel function PMT is used in computing the monthly payments as presented in the table below
Q1
a. 15 Years payment
PMT
Mortgage
(Loan)amount 300000
Interest rate (rate) 0.00375
Periods 180
Compounding periods per year 12
Monthly payment
(PMT) $2,294.98
Q1b
In a thirty year period, computations are a indicated below
b. 30 years payment
PMT (rate,nper,-pv)
Loan amount 300000
Interest rate (rate) 0.00375
Periods (nper) 360
Compounding periods per year 12
Monthly payment (pv) $1,520.06
Q1c
The total interest paid is computed by subtracting the principal from total payments as presented below
C.
Computation of total payments over the 15 years
period
Monthly payments $2,294.98
Number of payments 180
Total payments $413,096.38
Less principal 300000
Total interest paid $113,096.38
Q1d
Total interest paid is computed by subtracting the principal from total payments as indicated below
Column1 Column2 Column3 Column4 Column5 Column6
D.
Computation of total payments over the 30 years
period
Monthly payments $1,520.06
Number of payments $360.00
Total payments
547220.134
6
Less principal 300000
Total interest paid
247220.134
6
Q2a
Mortgage amount is computed using excel function PV as indicated below for the 15 years period
Q2
Mortgage (loan
amount)
$235,296.1
8
a Monthly payments 1800
rate 0.38%
number of payments 180
Q2b
Mortgage amount is computed using excel function PV as indicated below for the 30 years period
b.
Mortgage (loan amount) $355,250.0
9
Monthly payments 1800
rate 0.38%
number of payments 360
Q3
Based on the above analyses, it is clear that the attractiveness of the duration of payment period is dependent on the ability of the borrower. People with high monthly income should opt for shorter duration of payments while those with low paying capability should seek longer payment period.
Nevertheless, shorter periods are better among people with equal income levels as it attracts less interest.
907512.37 Mortgages 15yr vs 30 y final copy 907512.37 Mortgages 15yr vs 30 y ctt
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