# Mortgage Interest Cost Comparison Joe Levi bought a home for **$155,000** in Arlington, Texas. ## Step 1: Calculate Down Payment and Mortgage Amount - **Down Payment:** \( 30\% \times \$155,000 = \$46,500 \) - **Mortgage Amount:** \( \$155,000 - \$46,500 = \$108,500 \) ## Step 2: Mortgage Payment Factors Assuming you are referencing **Table 15.1** (typically an amortization table for monthly payments per $1,000 borrowed): - **30-year, 6 1/8% (6.125%)**: Payment factor = **$6.08** per $1,000 - **30-year, 5 1/2% (5.5%)**: Payment factor = **$5.68** per $1,000 *(If your table uses different values, substitute as needed.)* ## Step 3: Calculate Monthly Payments - **Loan Value (in $1,000s):** \( \$108,500 / 1,000 = 108.5 \) - **Monthly Payment (6.125%):** \( 108.5 \times \$6.08 = \$659.68 \) - **Monthly Payment (5.5%):** \( 108.5 \times \$5.68 = \$616.48 \) ## Step 4: Calculate Total Payments & Interest - **Total Payments (360 months):** - 6.125%: \( \$659.68 \times 360 = \$237,484.80 \) - 5.5%: \( \$616.48 \times 360 = \$221,932.80 \) - **Total Interest Paid:** - 6.125%: \( \$237,484.80 - \$108,500 = \$128,984.80 \) - 5.5%: \( \$221,932.80 - \$108,500 = \$113,432.80 \) ## Step 5: Find the Difference in Interest Cost \[ \$128,984.80 - \$113,432.80 = \$15,552.00 \] --- ## **Final Answer** **Difference in interest cost:** **$15,552.00** --- *Note: All calculations are rounded to the nearest cent as requested.*