Question

If Mary pay $3695.20for principal and interest every month for 30 years on her $110,000 loan, how much interest will she pay over the life of the loan?

Answer 1

$1,220,200

Explanation:

The total of Mary's payments is ...

$3695.20/mo × 30 yr × 12 mo/yr = $1,330,200

The difference between this repayment amount and the value of her loan is the interest she pays:

$1,330,200 -110,000 = $1,220,200 . . . total interest paid

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Mary's effective interest rate is about 40.31% per year--exorbitant by any standard.