Math Help - Mortage Question

1. 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?

2. 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.

3. 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

4. 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.

5. 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.