Answer:
$191,340.80
Explanation:
Step 1
We find the amount that is paid monthly by the Lee's
We are told in the question that:
Cost of the house =$360,000
Down payment = $50,000
We are also told, the balance left after the down payment was made = Mortgage that is amortized at an
Interest rate of 5.25%
Time = 20 years
Hence, Mortgage amount = $360,000 - $50,000 = $310,000
Formula for monthly payment =
M= P[r(1+r)^n/((1+r)^n)-1)]
M = the total monthly mortgage payment.
P = the principal loan amount.
r = your monthly interest rate.
= rate/12
=5.25%/12 = 0.0525/12
= 0.004375
n = number of payments
= number of years × number of months
= 20 × 12 = 240 payments
Formula for monthly payment =
M= P[r(1+r)^n/((1+r)^n)-1)]
M = 310,000[0.004375(1 + 0.004375)^240/((1 + 0.004375)^240 ) - 1]
M = $2,088.92
Therefore, the monthly payment by the Lee's is $2,088.92
Step 2
We calculate the Total Amount paid by the Lee's in 20years because we are told in the question that they paid off their mortgage after 20 years
Total Amount paid = Monthly payments × Number of payments
= $2,088.92 × 240
= $501,340.80
Step 3
The third and final step is to calculate the Total interest paid for 20 years
Total Interest = Total amount paid - Mortgage amount
= $501,340.80 - $310,000
Total Interest: $191,340.80
Therefore,the interest will they have paid in total is $191,340.80