Question

Calculate the total interest paid on a 30-year, 3.9% fixed-rate $200,000 mortgage loan.

Remember that number of compounding periods in a year n = number of payments expected to be made in a year. If you make monthly mortgage payments, then interest on the loan is compounded monthly.

Answer 1

Total Interest payment on Monthly compounding is $443,177

Step-by-step explanation:

Mortgage Interest payment will involve the compounding effect of interest amount.

Use following Formula

A = P ( 1 + r )^n

r = rate of interest = 3.9% = 3.9% / 12 = 0.325%

n = Number of periods = 30 years x 12 month each year = 360 periods

P = Principal amount = $200,000

A = $200,000 x ( 1 + 0.00325 )^360 = $643,177.17

Interest amount = $643,177.17 - $200,000 = $443,177.17