Mortgage lenders base the mortgage interest rate they offer you on your credit rating. This makes it financially critical to maintain a credit score of 700 or higher. How much more interest would you pay on a $193,000 home if you put 20% down and financed the remaining with a 30-year mortgage at 6.0% interest compared to a 30-year mortgage at 3.5% interest?
a. P = Po*r*t/(1-(1+r)^-t). r = 6%.
Po = 0.8 * 193,000 = $154,400 = Amount
financed.
r = (6%/12)/100% = 0.005 = Monthly % rate expressed as a decimal.
t = 30yrs * 12mo/yr. = 360 Months.
P = 154,400*0.005*360/(1-1.005^-360) =
$333,254.16.
Int. = P-Po = 333,254.16-154,400 =
$178,854.16.
b. Repeat part a for a 3.5%-30 yr. loan
and compare int.