Question

The price of a home is $300,000. After a 10% down payment, the mortgage is $270,000. If this is financed with a 30-year fixed-rate mortgage at 6%, what is the total interest paid over 30 year

Answer 1

312,764.40

Explanation:

We previously determined that you will make monthly payments of $1,618.79 for 30 years to pay off the loan. You are paying $1,618.79 per month for 360 months.

1,618.79×360−270,000=312,764.40

You are paying a total of $312,764.40 in interest over the life of the loan.

Answer 2

The correct solution is "$1618.79".

Explanation:

The given values are:

Home price,

= $300,000

Down payment,

= 10%

Mortgage,

= $270,000

Rate,

r = 6%

Time,

t = 30 years

As we know,

⇒
`PV=P[(1-(1+r)^(-n))/(r) ]`

On substituting the values, we get

⇒
`270 000= P[(1-(1+(6)/(1200) )^(-12* 30))/((6)/(1200) ) ]`

⇒
`P=1618.79` ($)