Question

You borrowed $185,000 for 30 years to buy a house. The interest rate is 4.5 percent, compounded monthly. If you pay all of your monthly payments as agreed, how much total interest will you pay on this mortgage?

Answer 1

total interest will you pay on this mortgage is $152,452.42.

Step-by-step explanation:

Interest is what makes the final payment larger than the amount initially borrowed.

So, we need to calculate the monthly payments first so that we can construct our amortization schedule and compute the total interest

PV = $185,000

N = 30 × 12 = 360

i = 4.5 %

P/YR = 12

FV = $0

Using a Financial calculator to input the values as above, the monthly payment is $937.37

The total interest can then be determining by taking into account period 1 to period 360 on our amortization table.

Using a Financial calculator, this would be $152,452.42