Solve the problem.

Question

In terms of paying less in interest over the full term of the mortgage, which is more economical for a  mortgage : 25-year fixed at 8.00% or 15-year fixed at 7.50%?

Answer 1

A = 300(1.08)^^25 = 300(6.84847) = 2054.54

A =300(1.075)^15 = 887.66

888-300 = $588 interest

2055 -300 = $1755 inrterest

7.5% at 15 years seems to be less interest payments, 1755-588 = $1167 less

but that doesn't account for present values

any shorter term loan will seem to be better with less interest payments

above numbers used 300 for $300,000, so adjust upwards by factor of 1,000