Answer:
Difference in interest= $41,250
Step-by-step explanation:
To calculate the interest paid on each bank loan we use the following formula
Interest = Principal * Rate * Time
For Bank A
Interest = 275,000 * 0.035 * 30
Interest = $288,750
For Bank B
Interest = 275,000 * 0.04 * 30
Interest = $330,000
Therefore
Difference in interest= 330,000 - 288,750
Difference in interest= $41,250
Therefore if the mortgage is taken from Bank B he will pay an extra $41,250 on the loan.
The 0.5% difference in rates has a large impact over the 30 year term loan
