You need $200,000 to buy a new home. The bank offers a choice of a 30-year loan at an APR of 8% or a 15-year loan at 7.5%. Assume the closing costs are the same for both loans.

Question

You need $200,000 to buy a new home. The bank offers a choice of a 30-year loan at an APR of 8% or a 15-year loan at 7.5%. Assume the closing costs are the same for both loans.
a) Compare the monthly payments for these two loan options.

b) Compare the total loan costs for these two loan options.

c) What are the pros and cons of each loan and which option would you choose?

Ms. Sue · Answer

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