You have been shopping for a new home. You have a choice of financing.You can choose either a $200,000 mortgage at 4.75 percent for 30 years, ora $200,000 mortgage at 3.5 percent for 15 years.a. Calculate the monthly payment for both the 30-year and 15-yearmortgages.b. Calculate the amount of interest paid over the life of the loan for bothmortgages.c. Choose the best mortgage for you and explain your answer.

Q: Explain which is the better option.

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.