Compare the monthly payments and total loan costs for thefollowing pairs of loan options. Assume that both loans are fixedrate and have the same closing costs.
You need a ?$110,000 loan.
Option? 1: a? 30-year loan at an APR of 7.25?%.
Option? 2: a? 15-year loan at an APR of 6.8%.
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1.) Find the monthly payment for each option.
The monthly payment for option 1 is what?
The monthly payment for option 2is?what?.
?(Do not round until the final answer. Then round to the nearestcent as? needed.)
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Find the total payment for each option.
The total payment for option 1 iswhat?
The total payment for option 2 iswhat?
?(Round to the nearest cent as? needed.)
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Compare the two options. Which appears to be thebetter? option?
A. Option 2 is the better? option, but only if the borrower canafford the higher monthly payments over the entire term of theloan.
B. Option 1 will always be the better option.
C. Option 1 is the better? option, but only if the borrowerplans to stay in the same home for the entire term of the loan.
D. Option 2 will always be the better option
