Question

THE BLACKS PUT $10,000 DOWN ON THEIR $80,000 NEW HOME AND WILL PAY $795.20 PER MONTH FOR 20 YEARS FOR PAYMENTS. HOW MUCH INTEREST WILL THYE PAY OVER THE LIFE OF THE LOAN?

Answer 1

First, find the total amount of money that they will pay.

Since each year has 12 months, then, there are 240 months in 20 years.

Since each month they pay $795.20, after 20 years they would have paid a total of:

`240*795.20=190,848`

They have also paid $10,000 initially. Then, the total money spent in the house is:

`190,848+10,000=200,848`

The value of the house is $80,000. Subtract $80,000 from the total amount of money that they have paid to find the total amount of interest:

`200,848-80,000=120,848`

Therefore, the total amount of interest that the Blacks will pay is $120,848.