Posted by **Blaire** on Thursday, September 29, 2011 at 10:31pm.

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

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