Question

lonny and mia each take out a 250,000 loan for a new house. each has to repay the loan in 25 years. lonny will pay an interest rate of 3.4% per year. his monthly payments will be $1250. because mia has a lower credit score she will have to pay an interest rate of 4.1% per year. her monthly payments will be $1360. how much more will a 250,000 loan cost mia than lonny?

Answer 1

Lonny takes a loan of 250000 and repays $1250 /month

in a year he pays 1250 x 12 =$15000

in 25 years he pays 15000 x 25 =$375000

mia pays 1360/ month. In a year she pays 1360 x 12 =$16320

in 25 years she pays 16320 x 25= $408000

difference in cost = 408000 -37500 = $33000

it will cost mia $33000 more for the loan.