Final answer:
The Bells will pay a total of $333,036 for their house over 30 years. They will pay $226,336 in total interest and points. For the first payment, they will pay $53.85 towards the principal, calculated from the initial monthly interest.
Step-by-step explanation:
To answer the student's question:
- The total amount the Bells will pay for their house includes the principal loan amount, the interest over 30 years, and the upfront points paid at closing. The mortgage amount is $110,000 with a 9.5% interest rate. Over 30 years, with monthly payments of $925.10, they would pay a total of $925.10 x 360 months = $333,036 in mortgage payments.
- To calculate the total interest paid, first calculate the total payment amount ($333,036) and subtract the principal ($110,000), which equals $223,036 in interest. Then, add the 3 points paid at closing, which are 3% of the principal, or $3,300. Thus, the total interest and points amount to $223,036 + $3,300 = $226,336.
- The amount of the first payment applied to the principal, commonly known as the principal portion of the first payment, can be found using an amortization schedule or a financial calculator. It is the total payment ($925.10) minus the interest portion for the first month.
Without the exact interest calculation for the first month, we cannot determine the exact principal paid in the first payment, but we can calculate the monthly interest for the first payment as follows:
$110,000 (principal) x 9.5% (interest rate) / 12 months = $871.25
Therefore, the principal paid in the first payment is $925.10 - $871.25 = $53.85.