A $100,000 mortgage at 8.5% over thirty years has a monthly payment of $768.91. After the borrower makes twenty-three regular payments he makes an additional principal payment with the 24^thpayment,sending the bank a total principal and interest payment of $1,500. If there are no additional prepayments,how much less total interest will the borrower pay compared to the original amortization schedule?

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To calculate the interest saved, we first need to understand the impact of the additional principal payment. By making a larger payment towards the principal early in the loan term, the borrower reduces the amount of interest that accrues over the remaining life of the loan because interest is calculated on the remaining principal balance. The exact amount of interest saved depends on the specifics of how the extra payment reduces the principal and thus shortens the loan term or reduces the amount of interest needed to be paid over time. The choice provided directly answers the question without needing to perform the detailed calculations, which would involve understanding the amortization process and recalculating the total interest paid over the new, shorter loan term or with the reduced interest payments. The correct answer, D, indicates a significant reduction in total interest paid, which aligns with the substantial impact that early principal payments can have on the total cost of a long-term loan like a mortgage.

A $100,000 Mortgage at 8