How much interest would an extra $5000 add to a 30 year mortgage @ 3.5%

Question

I can either pay closing cost which requires taking money from my retirement plan (no penality) or roll intro a 30 year mortgage. What is the final cost in interest?

Answer 1

By taking out 5000 more on your loan it will be 175 in extra intrest.

Answer 2

If the mortgage interest is compounded monthly, then the monthly rate is 3.5/12% or 3.5/1200=0.002917 approx.

30 years is 30*12=360 months. In 30 years then, $5000 would accumulate to 5000(1.002917)^360=$14266.44, which amounts to $9266.44 interest.

By comparison, the simple interest would be 5000*30*3.5/100=$5250, making the overall amount $10250.

These interest amounts are over 30 years. Taken over 1 year, simple interest would be 5250/30=$175 per year.

The compounded interest divided by 30 would be 9266.44/30=$308.88 average per year.