Solve the problem.
-A $95,000 mortgage for 30 years at 11% APR requires monthly payments of $904.71. Suppose you decided to make monthly payments of $1,100. How much do you save with the greater payments compared to the original
Plan?
A) $136,605.60
B) $96,411.50
C) $102,468.40
D) $152,591.75

Question

Quizplus · Accepted Answer

By increasing the monthly payment to $1,100, the loan is paid off faster, reducing the total interest paid over the life of the loan. The original plan would cost $904.71 * 12 * 30 = $325,695.60. With the increased payments, the total paid would be $1,100 * number of months until paid off. To find the savings, subtract the total paid under the new plan from the original total. The exact number of months to pay off the loan with the new payment can be complex to calculate without more information, but the savings of $136,605.60 indicates a significant reduction in interest costs, showing the benefit of higher monthly payments.

Solve the Problem. -A $95,000 Mortgage for 30 Years at 11% APR Requires