Answer:
The amount of total interest over the entire mortgage period could she save by financing her home with the 15-year mortgage is $138,612
Explanation:
First find the total interest on the 30-year mortgage:
PV = 195,000
N = 360
FV = 0
I = 6.1/12 = 0.5083
195,000 = PMT × PVIFA (0.061/12, 360 months); (in excel)
PMT of 1,181.69 × 360 = 230,408;
Next find the total interest on the 15-year mortgage:
PV = 195,000
N = 180
FV = 0
I = 5.5/12 = 0.4583
195,000 = PMT × PVIFA (0.055/12, 180 months); (in excel)
PMT of 1,593.31 × 180 = 91,796;
The amount of interest saved is: $230,408.34 − $91,796.29 = $138,612.05
