Question

MCAP offers a fixed-rate mortgage with a twenty-five year term at 5.00%. The mortgage has a twenty-five year amortization period. You want to borrow $500,000 to purchase a house. You choose monthly payments, which are $2,908.02. How much interest will you pay over the life of the mortgage?

Answer 1

The amount of interest you will pay over the life of the mortgage is $372,406.

Step-by-step explanation:

To calculate the amount of interest you will pay over the life of the mortgage, you need to subtract the principal loan amount from the total amount you will end up paying. In this case, the principal loan amount is $500,000. The total amount you will pay can be calculated by multiplying the monthly payment amount by the number of months in the mortgage term, which is 25 years or 300 months. So the total amount you will pay is $2,908.02/month x 300 months = $872,406.

To find the amount of interest, you subtract the principal loan amount from the total amount paid. So $872,406 - $500,000 = $372,406. Therefore, you will pay $372,406 in interest over the life of the mortgage.