Final answer:
To find Lynn's monthly mortgage payments, you must calculate the financed amount after 10% down payment, use the mortgage payment formula with the given interest rate and term, and then determine the total interest by subtracting the financed amount from the total amount paid over 30 years.
Step-by-step explanation:
Calculating Monthly Mortgage Payments and Total Interest
To find Lynn's monthly mortgage payments, we first need to determine the amount she is financing. Since she paid a 10% down payment on a $300,000 house, she is financing $300,000 - $30,000 (10% of $300,000) = $270,000.
The formula for the monthly payment (M) on a mortgage is derived from the present value of an annuity formula:
M = P [i(1 + i)^n] / [(1 + i)^n – 1]
Where:
- P is the principal loan amount
- i is the monthly interest rate (annual rate/12)
- n is the number of payments (loan term in years times 12)
Using Lynn's information:
- P = $270,000
- i = 6% / 12 months = 0.5% or 0.005 as a decimal
- n = 30 years * 12 months/year = 360
Plugging these values into the formula gives us Lynn's monthly payment.
To find the total interest Lynn will pay over the life of the loan, we multiply the monthly payment by the number of payments (360) and subtract the principal amount ($270,000) from the total.