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math URGENT HELP

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Mr. Hobbs was just about to take out a home mortage of $120,000 for 20 yrs at the rate of 10.0% compounded monthly. The monthly payments would have been $1158.03. But a competitive bank offered him a 30 yr mortgage at 9,5% which has monthly payments of $1009.03. Mr Gibbs went with the second bank because he assumed that a lower monthly payment and a lower interest rate would be a better bargain. Assuming that he could afford the higher payment; do you think he did the right thing? Explain your answer

  • math URGENT HELP - ,

    check on payments for each

    1)
    120000 = pay[1 + 1.00833333^-240]/.0083333
    payment = 1158.03

    2) 120000 = pay [ 1+ 1.00791666^-360 ]/.00791666
    payment = 1009.02

    Since the second had a lower interest rates, it should be his choice.
    The advantage will be with the lower rate.

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