Buying a House, with a Mortgage

The total cost of the home is $345000. With a required down payment of 20% ($69,000), this leaves the buyer in need of a loan of $276000. There are three options for the loan: (1) 25 years at 7.2%, (2) 30 years at 6.9%, or (3) 15 years at 8.1%.

Monthly Payment Calculations

Total Payment Calculations

Total Interest Calculations

3 Point Comparison


1. Using only the monthly payment to compare the loans, it can be concluded that the least expensive is the second structure. This means that it will have the smallest impact on the monthly budget each time.

2. Looking only at the amount of interest paid over the course of the loan, it can be surmised that the least expensive of the three mortgage structures is the third option. Costing “only” around 50k in interest, it is less than one sixth of either of the other two total interest options.

3. Looking at the total amount of money paid over the course of the loan, it is visible that the least expensive is the third structure. It costs very close to half of what the second and most expensive structure does.


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