Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.7 The Cost of Home Ownership - Exercise Set 8.7 - Page 556: 16

Answer

The 30-year mortgage is cheaper compared to the 15-year mortgage, because the buyer gets twice the time to pay the mortgage loan.

Work Step by Step

The mortgage is a legal agreement/contract, wherein any bank/financial institution grant money at the prescribed interest rate in exchange for debtor’s asset. The mortgage becomes void when the debtor pays the amount of mortgage along with the interest up to the period the money is borrowed. The per month payment of 30-year mortgage plan will be less compared to a 15-year mortgage option.
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