8. (The biweekly mortgage ) Here is a proposal that has been advanced as a...
80.2K
Verified Solution
Link Copied!
Question
Finance
8. (The biweekly mortgage ) Here is a proposal that has been advanced as a way for ( homeowners to save thousands of dollars on mortgage payments: pay biweekly instead of monthly. Specifically, if monthly payments are x, it is suggested that one instead pay x/2 every two weeks (for a total of 26 payments per year). This will pay down the mortgage faster, saving interest. The savings are surprisingly dramatic for this seemingly minor modificationoften cutting the total interest payment by over one-third. Assume a loan amount of $100,000 for 30 years at 10% interest, compounded monthly. (a) Under a monthly payment program, what are the monthly payments and the total interest paid over the course of the 30 years? (6) Using the biweekly program, when will the loan be completely repaid, and what are the savings in total interest paid over the monthly program? (You may assume biweekly compounding for this part.)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
