The price of a small cabin is $45,000. The bank requires a 5% down payment. The buyer is offered two mortgage options: 20-year fixed at 6.56.5% or 30-year fixed at 6.56.5%. Calculate the amount of interest paid for each option. How much does the buyer save in interest with the 20-year option?

Question

The price of a small cabin is ​$45,000.  The bank requires a​ 5% down payment.  The buyer is offered two mortgage​ options: 20-year fixed at 6.56.5​% or​ 30-year fixed at 6.56.5​%.  Calculate the amount of interest paid for each option. How much does the buyer save in interest with the​ 20-year option?

Reiny · Answer

All kinds of problems with this question.
It is invalid to compare "interest paid" when you don't have the same focal dates.
Are there monthly payments?

I sure hope you weren't thinking of using simple interest.
Since the interest rates are the same, the interest paid is the same.