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Math Help - Mortage Question

  1. #1
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    Mortage Question

    If you finance $50,000 of the purchase of your new home at 5.00% compounded monthly for 25 years, the monthly payment will be $292.30. If instead your had a rate of 5.50% compounded monthly for 10 years, the monthly payment will be $542.63. How much do you pay in total for the $50000 mortgage if you finance it for 25 years?
    Total payment =_____________

    How much do you save (in total payments) if you finance for 10 years instead?

    Answer:___________ dollars.
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  2. #2
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    I am glad you are here. Rule #1 is to give it a try. No one wants to do your homework. Let's see what you get.
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  3. #3
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    Attempt:1

    I think I figured it out. I needed to take (12)25 x 292.30 - 10(12) x 542.63 =

    87690-65115.6=22574.4
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  4. #4
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    I think you have it. Have you determined why you were struggling with it? Personally, I didn't want to mess with the mortgage formulas. I realized that such formulas were not necessary to solve the problem. Reading carefully is an important effort. Good work.
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  5. #5
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    Explanation

    I think I was struggling because there were numerous numbers given. I really thought I needed to use the Annuity formula. However, that wasn't the case.

    Thanks for your help!
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