The amount of money he will save by paying an extra $15,000 upfront is $11,974.80.
Loan = Cost - Down payment
Loan = $145,000 - $15,000
Loan = $130,000
<u>Given Information</u>
P/Y= 12, C/Y=12
N= 30*12= 360
I/Y = 4.38
PV= -130,000
Monthly payment = PMT(C/Y, N, I/Y, -PV)
Monthly payment = $649.45
Total interest over the whole term = Monthly payments * Number of payments - Loan
Total interest over the whole term = $649.45*360 - $130000
Total interest over the whole term = $103,802
If waited to have down payment of $30,000: The Loan= $145,000 - $30,000 = $115,000
<u>Given information</u>
N= 30*12= 360
I/Y = 4.38
PV= -115,000
Monthly payment = PMT (N, I/Y, -PV)
Monthly payment = $574.51
Total interest over the course of the mortgage = $574.52*360 - $115,000
Total interest over the course of the mortgage = $91,827.20
Money saved by paying extra $15,000 upfront = $103,802 - $91,827.20
Money saved by paying extra $15,000 upfront = $11,974.80
Therefore, the amount of money he will save by paying an extra $15,000 upfront is $11,974.80.
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