Answer:
25-year mortgage on the $255,000 house.
Explanation:
1. Convert the APR to a monthly interest rate by dividing it by 12 and converting it to a decimal. In this case, the monthly interest rate would be (3.7% / 12) / 100 = 0.003083.
2. Calculate the number of payments by multiplying the number of years by 12. In this case, the number of payments would be 25 * 12 = 300.
3. Calculate the monthly payment using the formula mentioned earlier, substituting the values we have:
Monthly payment = $255,000 * 0.003083 / (1 - (1 + 0.003083)^(-300))
4. Calculate the total payment by multiplying the monthly payment by the number of payments:
Total payment = Monthly payment * Number of payments
5. Finally, calculate the interest paid by subtracting the principal amount ($255,000) from the total payment:
Interest = Total payment - Principal