Question

In a fixed-rate mortgage loan, total interest paid is equal to _____________.

a) the sum of all monthly payments the difference between
b) the sum of all monthly payments and the down payment
c) the sum of all monthly payments plus the principal/loan amount borrowed
d) the difference between the sum of all monthly payments and the principal/loan amount borrowed

Answer 1

In a fixed-rate mortgage loan, the total interest paid is equal to the sum of all monthly payments plus the principal/loan amount borrowed.

Step-by-step explanation:

In a fixed-rate mortgage loan, the total interest paid is equal to the sum of all monthly payments plus the principal/loan amount borrowed (c).

An example will help illustrate this. Let's say you have a fixed-rate mortgage loan with a principal amount of $200,000 and an annual interest rate of 4% for a term of 30 years. The monthly payment can be calculated using an amortization formula, taking into account the loan amount, interest rate, and term. Let's assume the monthly payment is $955. In this case, the total interest paid over the 30-year term would be $235,682.15.